HC freezes 32% stake of GE-Bechtel in Dabhol

Mumbai, Feb 25 | Updated: Feb 26 2005, 05:42am hrs
GE and Bechtel on Friday received a setback as the Bombay High Court froze 49% of their 65.8% stake (effectively, 32% stake was frozen), in Dabhol Power Company (DPC). The combine had jointly acquired the 65.8% stake from Enron Corp and its associates.

The court order was passed on a petition filed by Maharashtra Power Development Corporation Ltd (MPDCL), which holds 15% stake in Dabhol Power Company .

GE and Bechtel, which had 10% each in Dabhol, had acquired another 65.8% in DPC after the US Bankruptcy Court upheld their transaction to take over the entire equity of Enron Corp and its associates. This increased the combines total stake to 85%.

In view of the HC order, they would not be able to claim the full ownership of the Dabhol project.

MPDCL is a special purpose vehicle (SPV) floated by the Maharashtra State Electricity Board (MSEB) to pick up 15% equity in DPC. MPDCL had challenged the acquisition of the stake held by Enron Corp and its associates in DPC. It had alleged that the entire transaction was illegal and that the combine had breached the shareholders agreement.

It had on Thursday presented a cheque of Rs 36 crore to the high court with its desire to pick up further equity in DPC.

When contacted, MPDCL and DPC preferred not to comment until they receive the written order. DPC could not argue anything in the court as the bankrupt Enron Corp and GE-Bechtel combine were involved in the transaction. In fact, at one point of time, the high court observed that Enron Corp should appear and argue its case.

With Fridays order, the Dabhol saga has taken a new twist as MPDCL is expected to gain more representation on the board of troubled DPC.

The order has come at a time when the Centre-appointed committee and GE-Bechtel combine have yet to arrive at a settlement of non-debt claims of $460 million made by the latter. The combine has turned down The committees offer to settle at $220 million.