Business & Economy

Essar Oil public shareholders to receive Rs 75.48 per share over delisting price

NetIndian News Network

Mumbai, August 22, 2017

Essar Energy Holdings Limited (EEHL) and Oil Bidco (Mauritius) Limited (OBML), the promoters of Essar Oil Ltd (EOL), today announced that they would pay to former minority shareholders, who tendered EOL shares in the Delisting Offer, an additional amount of Rs 75.48 per share, based on the current closing numbers, following the closure of the sale transaction with Rosneft and the Trafigura-UCP consortium.
The payment of around Rs 880 crore will be in addition to the Rs 3,064 crore that OBML had paid to the minority shareholders following EOL’s delisting in 2015, a press release from Essar said.
Essar founder Mr Shashi Ruia said: “We have always believed in creating value for all our shareholders. I am extremely happy with this outcome where we could maximise returns for our shareholders who had invested and believed in us. This transaction has created many records and the additional payout to shareholders over and above the delisting price is another first in the history of corporate India. This resonates with our philosophy of rewarding shareholders handsomely”.
EOL was valued at Rs 2,000 crore around the time of its listing in 1995, and has now been valued at about Rs 50,400 crore, a growth of 2420%. This value creation was made possible through continued strategic investments and growth of the businesses since commencement, the release said.
Mr Dhanpat Nahata, Director of EEHL said, “Essar Energy has created value not only for itself but also for the minority shareholders. The additional payment to minority shareholders is unprecedented as they got exit and liquidity upon delisting in December 2015, retained the upside from the transaction that has closed 20 months later, without carrying any downside risk.”
The promoters will shortly issue a public notice in this regard and as committed in the Delisting Offer of December 2015, the additional payout will be made within two months thereafter, the release said.
Of the 14.25 crore shares held by public shareholders, OBML acquired 11.66 crore shares through the delisting offer (including during the one year exit window) made to shareholders, as against the requirement of 9.26 crore shares for delisting. The shareholders tendered their shares through the reverse book building window made available to them under the delisting regulations. While the floor price for the delisting was set at Rs 146.05 per share in accordance with a SEBI-mandated formula, OBML agreed to pay Rs 262.80 per share, which was a premium of 80% over the SEBI mandated formula. Now, with the additional payout, the total price paid represents a premium of about 132%, the release added.
Russian oil giant Rosneft and the consortium of commodity and logistics major Trafigura and private investment group UCP have acquired 98.26% in Essar Oil Limited (EOL) for a total of $ 12.9 billion, making it India's largest inbound foreign direct investment (FDI) and Russia's largest ever foreign investment.
The transaction includes sale of includes sale of Essar Oil's refinery and retail assets ($10.9bn) together with Vadinar Port and related infrastructure assets ($2.0bn).
Rosneft (through its subsidiary, Petrol Complex Pte. Ltd) has acquired 49.13% stake, and Trafigura-UCP consortium (through Kesani Enterprises Company Limited) has acquired an equal stake. The remaining 1.74% stake continues to be held by retail shareholders.