ALSO READRussia's VTB head: Rosneft-Essar deal not subject to sanctions Rosneft, partners to invest around $12.9 billion in Essar Oil - CEO India, Russia in deal paving way for Rosneft-led group to acquire Essar Oil India's Essar agrees to sell oil arm to Rosneft-led group Rosneft-led group to buy India refiner Essar for $12-$13 billion, sources say
By Nidhi Verma and Promit Mukherjee
MUMBAI (Reuters) - The $12.9 billion sale of India's Essar Oil to a group led by Russia's Rosneft does not run foul of U.S. sanctions imposed against the majority state-owned Russian energy firm, parent Essar Group's CEO said on Sunday.
The sale, which was signed on Saturday. It is the biggest foreign acquisition ever in India and Russia's largest outbound deal.
The deal that will give Rosneft, commodities trading house Trafigura and private investment group United Capital Partners a 98 percent stake in Essar's oil arm is "US-sanctions compliant," said Essar Group's chief executive, Prashant Ruia.
He said the deal did not violate the economic sanctions imposed by the U.S. government on Russian entities over Russia's role in the Ukraine crisis. "The way it is structured, it is fully compliant. We are well within the rules that govern Russian companies."
Essar, controlled by the billionaire Ruia brothers, has interests in oil and gas, steel, ports and power, and has been under pressure from its lenders to reduce debts.
"It was an emotional decision, it was a very tough decision. It was difficult decision for people involved in the company and those who were involved in the business and building it," said Ruia in an interview with Reuters on Sunday.
"We felt all in all, we were getting attractive valuations and we decided to sell."
Essar plans to use proceeds from the sale to offset some 50 percent of the debt on its group companies after the deal is completed.
Ruia said the parent company's debt would be cut by some $5 billion and a further $5 billion would go towards trimming debt at the operating company level.
Some of the proceeds from the transaction will be pumped into existing businesses, said Ruia, adding that the group does not have any plans to sell any of its other businesses in the future or any plans to de-list them to gain more control.
(Reporting by Nidhi Verma and Promit Mukherjee; Editing by Euan Rocha, Greg Mahlich)
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