Essar Oil sale okayed by creditors: reports

MUMBAI, June 23, 2017 – Creditors have approved the USD 12.9-billion sale of Essar Oil to Russia’s Rosneft, international media reported on Friday.

Several banks that hold some USD 500 million of the company’s debt have approved the transaction, removing an important hurdle, though it’s not clear yet if India’s largest insurance corporation, which is also among the creditors, is on board, Reuters reported.

In a deal struck last October, which is to cement Rosneft’s presence on the Indian market, the Russian oil giant is to acquire a 49% stake in Essar Oil while partners Trafigura and United Capital Partners will take an additional 49%.

Among other Essar Oil assets, the consortium led by Rosneft will acquire a 20-million-tpy refinery in Gujarat and E&P assets that would add some 2.11 billion boe to its reserves.

According to the Financial Times, a key issue holding up the transaction to date has been a demand by the creditors that part of the proceeds be invested in Essar Oil’s sister company Essar Steel, which is also undergoing a restructuring. It was not immediately clear on Friday if this condition has been met.

A separate report by the Economic Times newspaper claimed that India’s Home Ministry and Intelligence Bureau have objected to Vadinar Port being part of the transaction, though Essar representatives assured the daily that “All requisite approvals from government of India for the Essar Oil transaction to proceed are available.”

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