The transaction which will bring down the group's debt by Rs 70,000 crore has also brought to an end the asset monetisation program Essar Group had initiated in order to lighten its balance sheet. With this, the group level debt would now stand at about Rs 40,000 crore.
“Of the total deal amount ($12.9 billion), about $5 billion debt held at group level will get settled through this transaction and another $6 billion debt of Essar Oil will be taken by Rosneft consortium,” explained Prashant Ruia, Essar Group director to reporters on the sidelines of the press meet held here on Monday.
The acquisition which will be India's largest by a foreign company, post transaction will see the group assets stand at $17 billion as it will include operational facilities of steel, power, ports, shipping, refining and gas.
The shareholding pattern post the deal would have Rosneft (through its subsidiary, Petrol Complex Pte Ltd) acquiring 49.13 percent stake, with Trafigura-UCP consortium (through Kesani Enterprises Company Limited) holding equal stake quantum. The remaining 1.74 percent stake continues to be held by retail shareholders, said the company in its release.
The Essar-Rosneft transaction includes Essar Oil's 20 million tonne refinery along with retail assets, the Vadinar port and associated facilities. However, Essar Energy would still remain invested in the oil&gas sector through its nine million tonne refinery in Stanlow, in North West England.
The company said its focus going ahead would be on sweating of existing assets and make investments in relevant sectors to enhance growth.
While the debt reduction plan through this deal will lighten the balance sheet of Essar Group, debt to domestic lenders also gets lowered by Rs 4,000 crore, informed the management.
“We welcome the acquisition of Essar Oil by the Rosneft-led consortium. 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 percent,” Chanda Kochhar, managing director and chief executive officer at ICICI Bank was quoted as saying.
“I am delighted to note that the entire ecosystem including the government, regulators, banks and various authorities worked together to complete the deal. The deal also underscores the keenness of foreign investors to enter India, the fastest growing large economy in the world,” said Kocchar.
The deal has come more than 10 months after it was announced on October 15 last year on the sidelines of the BRICS summit in Goa. The transaction got delayed after the lenders wanted their debt worth over Rs 45,000 crore to be cleared.