Essar Oil delisting gets through as Sebi clears LIC bids

Essar Energy was recently delisted from London Stock Exchange, while the group also took private its locally-listed ports business recently.

essar oil delisting news
Essar Power Ltd is one of India's top five private sector power producers with over 20 years operating track record. (Reuters)

Essar Oil’s delisting today got through as the markets regulator Sebi gave its go-ahead to the stock exchange BSE to accept nearly 2 crore shares tendered by the state-run LIC for the promoters’ buyout offer.

The delisting had got mired in “technicalities” on the last day of the offer on Monday, after a large block of tendered shares could not be ‘confirmed’ within the stipulated time, prompting BSE to refer the matter to Sebi.

While the promoters’ buyback offer had got more than sufficient bids, the non-confirmation of this large chunk of shares – tendered by LIC – had come in the way of the closure of the delisting offer.

After looking into the matter in detail in consultations with all the stakeholders concerned, Sebi has now given its go-ahead for the confirmation of those shares, top officials at the exchange and the company said.

The offer 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 LIC had remained ‘unconfirmed’ on the stock exchange platform till the time of the scheduled closure of the offer at 3.30 pm on Monday.

Sources said the bids from LIC had come 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 was subsequently looked into by all the entities concerned — Essar Oil, LIC, BSE and the custodian for LIC shares, StockHolding Corp.

“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 had said earlier.

The delisting offer saw shares getting 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 on Monday, a gain of nearly 8.5 per cent. The stock was down more than 1 per cent yesterday, but bounced back today and was trading nearly 6 per cent higher at Rs 253.65 in morning trade.

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.

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First published on: 23-12-2015 at 12:03 IST