Essar yet to decide on Vodafone stake sale

Written by fe Bureaus | New Delhi | Updated: Jul 31 2010, 04:49am hrs
The Essar Group on Thursday said it is yet to decide on exercising the option to sell its 33% stake in the telecom joint venture with UKs Vodafone, for which it has time till May 2011.

We have time till May 2011 to decide on that (the put option), Prashant Ruia, vice-chairman of Essar Energy, told reporters here after signing the production sharing contract for four coal-bed methane blocks with the Union petroleum ministry.

Ruia did not rule out the possibility of an initial public offer (IPO) for selling the stake valued at about $5 billion.

Under the 2007 shareholders agreement between the two companies, Essar has a put option of divesting its stake in the Vodafone Essar telecom venture. The put option expires in May 2011 and Essar has almost a year to take a call.

On the option of Essar coming out with an IPO, Ruia said, It is one of the options and that is under preliminary discussions. He, however, did not specify when it would come out with an offer. It is too early and we cannot comment on that,Ruia said.

In 2007, Vodafone bought a controlling stake in Hutchison Whampoa Ltds mobile business in India, in which Essar had been a partner. The deal gave Essar the option to sell its entire 33% stake in the telecom venture to Vodafone for $5 billion between the third and fourth years of the deals completion.

Alternatively, Essar could sell shares worth between $1 billion and $5 billion in the company to Vodafone at an independent valuation. The option for the sale opened in May and runs for 12 months.

Essar Energy to invest $32-40 m in CBM blocks

Essar Energy would invest about $32-40 million for the first stage of exploration and development of the four coal bed methane (CBM) blocks for which rights were acquired on Thursday, company officials said. Essar bagged four of the seven blocks that were auctioned last year, while Great Eastern Energy Corp, Australias Arrow Energy, Oil India Ltd consortium and Arrow Energy -Tata Power Company combine bagged the rest.