Mumbai: Essar Oil Ltd has sought the consent of market regulator Securities and Exchange Board of India (Sebi) to extend the deadline for paying its minority shareholders, after its nearly $13-billion acquisition by a consortium led by Russia’s Rosneft PJSC, two people aware of the matter said.
The sale closed on 22 August and Essar Oil was to pay its shareholders by 27 October.
Essar Oil, controlled by billionaire brothers Shashi and Ravi Ruia, has written to Sebi seeking to delay the payment by eight weeks, said the two people mentioned earlier.
The company may now pay its shareholders by 15 December, the first person added.
Essar Oil and Sebi did not reply to an email sent on Wednesday.
Essar Energy Holdings Ltd (EEHL) and Oil Bidco (Mauritius) Ltd (OBML), promoters of Essar Oil, had committed to paying Rs75.48 per share to minority shareholders following the sale of the company’s assets to Rosneft, the Netherlands’ commodity trader Trafigura Group Pte. and Russian investment fund United Capital Partners.
In August, Essar group sold Essar Oil to a Rosneft, Trafigura and UCP consortium for $12.9 billion. The transaction involved Rosneft picking up a 49% stake in Essar Oil’s 20-million tonne (mt) Vadinar refinery in Gujarat, a captive port (58 mt); a 1,010 megawatt multi-fuel power plant and over 3,500 petrol pumps.
Another 49% was split between Trafigura Group and United Capital Partners.
After the deal, Essar Oil was to pay around Rs880 crore to minority shareholders. Because of the delay in making the payment, the company’s total outgo will now be Rs902 crore, including interest liability.
“Due-diligence on the payment took longer than expected. But now through a loan from the Russian bank, VTB, Essar Oil has decided to pay the 11.65 lakh shareholders to the tune of Rs 902 crore. This includes the interest payment,” said a person aware of the development, requesting anonymity.
Essar Oil was delisted in 2015 and its promoter OBML paid Rs3,064 crore to minority shareholders following the delisting.
“The obligation to pay the shareholders in time is on Essar Oil. Sebi should take action against such companies and ensure there are no violations,” said Shriram Subramanian, founder and managing director, InGovern Research Services, a proxy advisory firm.
Sebi had in November 2015 asked the Essar Group to pay the difference between the transaction price with Rosneft and the final delisting price to those shareholders whose shares were accepted.
Of the 142.5 million shares held by public shareholders, OBML acquired 116.6 million through the delisting offer made to shareholders, as against the requirement of 92.6 million shares.
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 Rs146.05 per share in accordance with a Sebi-mandated formula, OBML agreed to pay Rs262.80 per share, a premium of 80%.