Essar Oil Successfully Concludes 9.26% Stake Sale To Rosneft, Partners

Russia’s Rosneft completes Essar Oil takeover deal

EOL has a vast retail network of over 3,500 Essar-branded fuel stations across India.

The first agreement involved the sale of 49% of the company to Petrol Complex, a subsidiary of PJSC Rosneft Oil Company; the second saw the remaining 49% sold to Kesani Enterprises Company - a consortium of European trader Trafigura and Moscow-based fund United Capital Partners - at an enterprise valuation of $10.9 billion.

Debt-free: The acquisition comes as a major relief to the Essar Group, which is reeling under a heavy debt burden and is under tremendous pressure to repay its outstanding loans and cut the debt load.

Essar Energy Holdings and Oil Bidco (Mauritius) - the controlling shareholders of Essar Oil - entered into separate definitive agreements for the sale of 98% of the company.

Trafigura has teamed up with UCP Investment Group to acquire a 49% stake in India's Essar Oil.

The transaction, announced by Indian Prime Minister Narendra Modi and Russian President Vladimir Putin last October during the BRICS Summit has been much delayed over haggles by Essar's creditors and India's intelligence establishment raising several red flags. The deal for the 400,000 bopd refinery will give Russia's biggest oil producer an outlet in South Asia for its production as oil-rich countries vie for market share.

He said the deal "reflects the shared vision of two of the world's most dynamic leaders". We have substantially deleveraged our portfolio companies' balance sheets, reducing debt by over US$ 11 billion (Rs 70,000 crore). "For Essar, the closure of this landmark transaction ushers in a new phase of growth across our portfolio of businesses that hold great promise in India's enduring development story". "This is the single largest deleveraging ever undertaken in Indian corporate history", Prashant Ruia said, adding the deal has helped to cut the group's overall debt by half.

"This day marks the beginning of a new chapter for Essar Oil".

"Over the last six years, we have completed a capital expenditure program of over 1.2 trillion rupees across our entire portfolio of core sector businesses".

Rosneft head Igor Sechin, not present at the press meet, said that together with new partners they intend to support the Essar Oil to significantly improve its financials in the medium-term, adopt an asset development strategy.

Essar Oil's lenders include State Bank of India, ICICI, IDBI and Axis Bank. He was earlier Chief Financial Officer of Trafigura India since 2012.

LIC, which had some exposure to Essar Power and Port and not to Essar Oil, and key player in delaying the deal, will get around Rs 800 crore, Ruias said but refused to name other lenders who will get paid.



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