HPL takes loan on Lummus books to fund deal

Master dealmaker Purnendu Chatterjee has come up with a complicated, layered financing structure for the $2.7 billion acquisition of Lummus Technology of the US from McDermott International Inc: it has the elements of a leveraged buyout — without recourse to its new owners — topped with a bank guaranteed-debt and a shovelful of internal cash.

There are two basic halves in the financing of the acquisition. The two partners — Chatterjee’s Haldia Petrochemicals and New York based private equity firm Rhône Capital — will be together forking out $1.225 billion (Rs 9,187.5 crore) — to pick up equity in Lummus. HPL will hold a 57 per cent stake, while Rhône Capital will hold 43 per cent.