The $12.9-billion deal between Essar Oil and Rosneft has been delayed by a few weeks due to pending approvals from lenders.
In October, Essar Oil had announced that it was selling 98 per cent to Russia’s Rosneft Oil Company and a consortium of traders led by Trafigura and United Capital Partners.
The companies were keen to close the deal by March 31.
“The parties announced the execution of share purchase agreements in October 2016 and the completion of the transaction was conditional upon receiving requisite approvals and satisfaction of customary conditions. The parties are working towards obtaining the requisite approvals to complete the transaction. We are hopeful that the deal will be completed in the upcoming few weeks," said a spokesperson from Essar group.
Russia's second-biggest bank VTB, which is involved in financing the deal, has said that 19 more days will 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 told Reuters.
The all-cash deal assigns an enterprise value (a total of equity and debt minus cash) of ₹72,800 crore for Essar Oil's refining and fuel retail assets.
An additional ₹13,300 crore will be paid for the adjacent Vadinar port and related infrastructure. Essar Oil operates India's second largest refinery at Vadinar, Gujarat, with a capacity of 20 million tonnes per annum, a 1,010-MW captive power plant and a network of 2,700 operating fuel retail outlets.
According to the two definitive agreements that have been signed, Essar Energy Holdings and Oil Bico (Mauritius) — the controlling shareholders of Essar Oil Ltd — will sell 49 per cent stake to Petrol Complex Pte Ltd (a subsidiary of the Russian Rosneft Oil Company) and another 49 per cent to Kesani Enterprises Company Ltd, a consortium of Trafigura, the world’s largest commodity trader, and private equity group United Capital Partners. In this consortium, Essar will hold 2 per cent of stake.
Essar Oil was a publicly listed company till last December, when it delisted from stock exchanges at a valuation of ₹38,000 crore.
The equity inflow from the deal will help Essar Oil bring down its group-level debt of nearly ₹88,000 crore down by slightly over half.