The Essar Group today said it will pay an additional Rs 75.48 per share to Essar Oil’s ex-shareholders, who tendered their shares at the open offer in the run-up to the delisting of the company that was sold to the Russian giant Rosneft yesterday for $12.9 billion. “Essar Oil public shareholders to receive an additional Rs 880 crore or Rs 75.48 per share over delisting price taking the total payout to Rs 3,944 crore from Rs 3,064 crore,” the group said in a statement. The decision follows its public announcement yesterday and is also pursuant of the Sebi’s direction. Former minority shareholders, who had tendered EOL shares in the delisting Offer of February 2015, will receive the differential amount of Rs 75.48 for every share tendered. This is the additional payout over and above the price of Rs 262.80 per share paid to shareholders at the time of delisting on the basis of equity price per share of Rs 338.28 received by Essar upon completion of the deal, the company said. It can be noted that in the largest FDU deal in the country, the Essar Group had yesterday concluded sale of its crown jewel Essar Oil and the adjacent to 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 $12.9 billion.
The deal is the largest foreign direct investment into the country as also the largest out of Russia till date. 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. “This is the first instance where public shareholders are being rewarded even after tendering their shares in a delisting process,” the company said.
Essar Group founder Shashi Ruia said, “We have always believed in creating value for all our shareholders. I am extremely happy with this outcome where we could maximise returns for our shareholders who had invested and believed in us.” “This transaction has created many records and the additional payout to shareholders over and above the delisting price is another first in the history of corporate India,” Ruia said.
The EOL was valued at Rs 2,000 crore when it was listed in 1995, and has now been valued at about Rs 50,400 crore, a growth of 2,420 per cent when it was taken private again. Essar Energy Holdings director Dhanpat Nahata said, “The additional payment to minority shareholders is unprecedented as they got exit and liquidity upon delisting in December 2015, retained the upside from the transaction that has closed 20 months later, without carrying any downside risk.” The promoters will shortly issue a public notice in this regard and as committed in the delisting offer of December 2015, the additional payout will be made within two months thereafter. The delisting saw out of the 14.25 crore shares held by public shareholders, Oil Bidco Mauritius (the holding company of Essar Energy) acquiring 11.66 crore shares (including during the one-year exit window) as against the requirement of 9.26 crore shares for delisting.
While the floor price for the delisting was set at Rs 146.05 per share in accordance with a Sebi-mandated formula, Oil Bidco agreed to pay Rs 262.80 per share, which was a premium of 80 per cent over the Sebi mandate.
Now, with the additional payout, the total price paid represents a premium of about 132 per cent.