The purchase of Indian refiner Essar Oil by a consortium led by Russian oil company Rosneft has been delayed by a few weeks, the two sides said on Friday, because some Indian lenders to Essar have yet to sign off on the deal.
The purchase of Indian refiner Essar Oil by a consortium led by Russian oil company Rosneft has been delayed by a few weeks, the two sides said on Friday, because some Indian lenders to Essar have yet to sign off on the deal. The $12.9 billion deal, in which Rosneft is set to take a 49 percent stake in Essar to pursue its global expansion, was expected to close by the end of this month. Russia’s second-biggest bank VTB, which is involved in financing the deal, has said that 19 more days would be needed to settle all the payments. “The closure of the deal is delayed by a few weeks due to the pending approvals from the Indian banks. Both parties are still committed to close this deal as soon as the few remaining approvals from the banks are obtained,” the bank said in emailed comments to Reuters. The deal, the largest foreign acquisition of an Indian company, would give Rosneft a foothold in the growing Indian market. It already operates in a number of regions, including Europe and Latin America.
A 49 percent share will be split between commodities trader Trafigura and Russian investor United Capital Partners (UCP).
The billionaire Ruia brothers would retain a 2 percent stake. “The closing was postponed into April because the buyers were dealing with 28 Indian banks that had credit lines with Essar Oil,” a source close to the transaction said. The source added that separate debt of holding company Essar Global was also affecting negotiations indirectly as some banks were lenders to both Essar Global and Essar Oil. Essar Oil operates a 400,000 barrel-a-day refinery in Vadinar on India’s west coast and sells fuels through its 2,470 filling stations across the country.
“The parties are working towards obtaining the requisite approvals to complete the transaction,” Essar said on Friday. The Economic Times reported last week that one of Essar’s creditors, India’s LIC, had demanded dues from Essar to give its clearance to the deal.