In a notice to the Bombay Stock Exchange, Essar Oil said it has received a letter from its promoter, Essar Energy Holdings Ltd (EEHL) for voluntarily delisting of the equity shares of the company from BSE and National Stock Exchange by purchasing shares held by public.
Mumbai-based Essar Group wants to buy all the shares it doesn't already own in Essar Oil. Turning it private would give billionaire brothers Shashikant and Ravikant Ruia a free hand to revamp the companies.
Currently, the company's public shareholders hold 137.123 million equity shares or 27.53 per cent.
"The promoter has requested the (Essar Oil) Board to: (a) approve the delisting proposal; and (b) seek the requisite approval of the delisting proposal from the equity shareholders of the company through a postal ballot," the filing said.
Essar Oil has scheduled a board meeting on June 23 to consider the delisting proposal.
Ruia-brothers' holding firm EEHL, a company incorporated in Mauritius, holds 71.22 per cent stake in Essar Oil.
The delisting proposal, EEHL said, was as part of its business strategy of taking the entire hydrocarbon/energy business private (unlisted) following the delisting of shares of Essar Energy plc from LSE on June 10.
"EEHL believes that the company requires sustained, substantial investment to develop and grow its businesses (especially the refining and marketing business). Full ownership of the company will provide EEHL with increased operational/financial flexibility to support the company's businesses and strategic needs," the promoters said in the letter to Essar Oil.
The proposed delisting was in furtherance of the strategic intent of the promoters to achieve greater flexibility for equity infusion into the company.
"EEHL believes that the delisting of the company's equity shares will be in the interest of the public shareholders of the company as it will provide them with an exit opportunity from the company at a price determined in accordance with the reverse book building mechanism set out in the SEBI Delisting Regulations," the promoters said in the letter to Essar Oil.
The price payable by EEHL for the acquisition of the public shareholders' shares would be the price at which the maximum number of shares are tendered in a reverse book-building mechanism.
Shares of Essar Oil today rose 1.64 per cent to end at Rs 108.40 apiece on the BSE where benchmark Sensex ended 0.38 per cent down.