Mumbai, Aug 21 (IANS) Ruia brothers-led Essar Oil (EOL) on Monday announced the closure of the company’s sale, including its Vadinar refinery, to Russian state-run Rosneft-led consortium for $12.9 billion, which was followed by the appointment of a new board of directors for EOL as well as a new chief executive. Also Read - Kareena Kapoor Khan is Not Sure If Taimur Ali Khan is Stretching Post Yoga Or Nap | See Photo
According to an Essar Oil statement, the transaction, which was initiated in 2016 on the sidelines of the BRICS leaders summit in Goa, represents the largest foreign direct investment (FDI) into India till date. Also Read - No Lockdown in Goa, Move Will Disrupt Economic Activities: CM Pramod Sawant
It is also Russia’s single-largest foreign investment made anywhere in the world. Also Read - Krishna Shroff Chills in a Bikini as She Visits Goa Amid Rising COVID Cases in Maharashtra - See Pics
The deal includes acquisition of Essar Oil’s 20 million tonne Vadinar refinery in Gujarat and its retail outlets, as well as the Vadinar Port at an additional $2 billion.
The first deal involves the sale of 49.13 per cent stake in Essar Oil to Petrol Complex, a subsidiary of Rosneft, while the second envisages the sale of another 49 per cent to Kesani Enterprises, owned by a consortium led by Trafigura and United Capital Partners.
The remaining 1.74 per cent stake continues to be held by retail shareholders.
Rosneft had announced in December that it would close the deal within a few weeks, but the sale got delayed owing to lenders insisting that their debts with Essar be cleared first.
“Essar Energy would also like to specially thank EOL’s lenders — State Bank of India, ICICI Bank, IDBI Bank, Axis Bank, Yes Bank, and rest of the consortium — for supporting Essar Oil through its journey of over two decades that has now culminated in this value-accretive transaction,” the statement said.
“We have substantially deleveraged our portfolio companies’ balance sheets, reducing debt by over $11 billion, or Rs 70,000 crore,” Essar Capital Director Prashant Ruia said.
Elaborating on this in a subsequent release, Essar said that it “has paid circa $5 billion (Rs 32,000 crore) to lenders to repay debt at Holdco level, debt of circa $5.4 billion (Rs 34,400 crore) in EOL, VOTL and VPCL has become non-Essar exposure.
“Further circa $600 million (Rs 4,000 crore) has been used to repay Indian lenders at operating company level (Essar Oil Limited, VOTL and VPCL).”
Commenting on the development, ICICI Bank Chief Executive Chanda Kochhar said in a statement: “ICICI Bank has played a key role through the entire process of completion of the transaction since it was announced in October last year. This transaction reduces ICICI Bank’s exposure to the Essar Group by about 50 per cent.”
Following the closure of the sale, Essar Oil announced the appointment of a new board of directors and chief executive officer.
“The new board will be chaired by Tony Fountain who brings 30 years of industry experience having held senior roles with BP, Reliance Industries in India and currently with the UK’s Nuclear Decommissioning Authority and ATCO, one of Canada’s major energy companies,” a statement said here.
It also named B. Anand as the new Chief Executive Officer of the company with immediate effect.
According to the statement, Anand has over 30 years’ experience in corporate finance, investment banking and in the commodity trading industry. He was earlier Chief Financial Officer of Trafigura India since 2012. Prior to Trafigura, Anand was Group Director of Finance for the Future Group and also held senior positions with Vedanta Resources Group.
This is published unedited from the IANS feed.