Ruias clear Rs 891 crore additional payout to Essar Oil shareholders

After multiple extensions from Securities and Exchange Board of India (SEBI) and four months after the closure of USD 13-billion sale of Essar Oil to the Russian giant Rosneft, the promoters today announced a payout of Rs 891 crore to erstwhile minority shareholders of the company.

The Essar Energy Holdings and Oil Bidco Mauritius, the promoters of Essar Oil, have paid an additional Rs 76.41 a share to the minority shareholders, a company statement said.

The shareholders were initially paid Rs 262.80 per share at the time of delisting which worked out to Rs 3,064 crore for the 11.66 crore shares.

Essar Oil inked a deal with Russian energy giant Rosneft and a consortium led by Trafigura-United Capital Partners for Rs 338.28 per share in October 2016, which was consummated only this August.

The issue of additional payout to the ex-minority shareholders came up after criticism rose that the promoters enriched themselves too much with the delisting.

This prompted markets watchdog Sebi to intervene and ask the promoters to pay back the margin between the delisting price and final transaction price between the Ruias and Rosneft and a consortium led by the Dutch commodity trader Trafigura and the Russian investment bank UCP.

In November 2015, while the deal talks were still on, Sebi had said if the sale gets finalised, the promoters of Essar Oil will have to pay the differential between the delisting price and deal price to minority shareholders participating in the delisting.

The market regulator had given Essar two months to pay the money to the minority shareholders, resulting in the extensions being sought.

In a statement, the company said the additional payout was calculated "on the closing price, including the interest at 10 per cent per annum for the extended period beyond the prescribed due-date".

Essar Energy Holding director Dhanpat Nahata claimed that the payout is "unparalleled in the history of the country's capital markets" and "aligns with our thinking of rewarding shareholders who had invested and believed in us".

The company said Essar Oil was valued at Rs 2,000 crore at the time of listing in 1995, which shot up to Rs 50,400 crore at the time of sale.

The public had held 14.25 crore shares, of which Oil Bidco Mauritius, the holding company of Essar Oil, had acquired 11.66 crore during the delisting as against the requirement of 9.26 crore shares.

The floor price for the delisting was set at Rs 146.05 per share in accordance with a Sebi-mandated formula and Oil Bidco Mauritius paid Rs 262.80 per share or a premium of 80 per cent. With the additional payout, the total price paid represents a premium of about 132 per cent, the company said.

The Essar Group concluded sale of its crown jewel Essar Oil which runs the second largest refinery in the private sector in the country with a 20 million tone capacity and the adjacent captive 58 million tonne oil terminal, a 1,010-mw power plant and over 3,500 fuel outlets to the Russian government-controlled Rosneft for an enterprise valuation of USD 12.9 billion.