ONGC extends support to OPaL with additional backing

ONGC (Oil and Natural Gas Corporation Limited) has provided additional information regarding its extension of back-stopping support for Compulsorily Convertible Debentures (CCDs) issued by ONGC Petro additions Ltd (OPaL).

The guarantees and indemnity are provided to ONGC Petro additions Ltd (OPaL), a joint venture in which ONGC holds a 49.36% equity stake, with other equity shareholders being GAIL (India) Ltd. (GAIL) and Gujarat State Petroleum Corporation (GSPC).

ONGC's involvement is due to its status as a promoter and equity holder in OPaL. Back-stopping is an option agreement that, in the case of a put option, allows the CCDs to be converted into equity shares held by ONGC or its nominee(s). No charges are to be paid by ONGC for this back-stopping support.

The extension of back-stopping support for an additional six months will help OPaL maintain the continuity of CCDs, amounting to Rs. 5,615 crore, beyond their current maturity period, starting from January 2, 2024.

ONGC has also provided a Letter of Comfort (LOC) to OPaL, enabling the joint venture to raise debt up to Rs. 5,400 crores. The LOC issuance is subject to shareholder approval and is designed to provide comfort to investors of debt instruments. OPaL must utilize the LOC within six months from the date of final approval.

The extension of back-stopping support will allow OPaL to continue with the CCDs issued to investors, while the LOC will facilitate the JV in raising debt at competitive rates.