Essar Oil’s delisting has got mired in “technicalities” with a large block of tendered shares failing to be ‘confirmed’ within time, prompting the stock exchange BSE to refer the matter to the regulator Sebi.
While the promoters’ buyback offer got more than sufficient bids, the non-confirmation of this large chunk of shares – presumably tendered by LIC – has left the fate of the delisting offer uncertain.
The offer which closed yesterday is said to have received total bids for an estimated 10.1 crore shares, as against a requirement for 9.26 crore shares for the offer to succeed.
However, over 1.98 crore shares tendered by state-run LIC, remained ‘unconfirmed’ on the stock exchange platform till the time of the scheduled closure of the offer.
Sources said the bids from LIC came well within the scheduled time as shares tendered even later than LIC’s bid got confirmed, but some “technicalities” led to the LIC shares remaining in the ‘unconfirmed category’.
The issue is being looked into by all the entities concerned — Essar Oil, LIC, BSE and the custodian for LIC shares, StockHolding Corp. There were no official details from any of the entities.
“Due to technicalities relating to timing of the confirmation of some of the institutional offers received for the delisting process of Essar Oil, the matter is being referred to Sebi for their decision,” BSE said in a note.
The delisting offer saw shares being tendered at a Reverse Book Build discovered price of Rs 262.80 each which is at about 80 per cent premium to floor price of Rs 146.05.
Essar Oil shares had closed sharply higher at Rs 243.35 at BSE yesterday, a gain of nearly 8.5 per cent.
However, the stock was down nearly 1 per cent in today’s trade after hitting a new peak of 249.80 earlier in the morning.
The delisting offer for the country’s second biggest private sector oil refiner had begun on December 15.
The promoters have offered to delist the company from local bourses by buying out the non-promoter shareholding of 28.54 per cent.
“The proposed delisting of equity shares from the stock exchanges is to achieve complete operational or financial flexibility in furtherance of the company’s business or financial needs and enable promoter shareholders and the promoter to pursue strategic opportunities in respect of its investments,” the company had said in its delisting notice.
Essar Energy was recently delisted from London Stock Exchange, while the group also took private its locally listed ports business recently.
While making the delisting offer for Essar Oil, the promoters had said it will be in the interest of the public shareholders “as it will provide them with an exit opportunity from the Company in an open and transparent manner at a price calculated by the reverse book building mechanism set out in the Delisting Regulations (of Sebi)”.
The promoters have also signed a non-binding term sheet with Russian oil major Rosneft for sale of up to 49 per cent stake in Essar Oil.
If this transaction materialises, Essar Oil promoters will have to pay the difference, if any, between the transaction price received from Rosneft and the delisting price to those public shareholders whose equity shares are accepted under the delisting offer, as per a Sebi order.