Essar Oil kissing Rs 200 ! ~ Exposes Delisting Duplicity !
For a year now and after Essar Oil announced intention to delist last year,I’ve been maintaining how the Promoters,Ruias are bent on short circuiting Minority Shareholders by delisting at a low price…here are some of my earlier blogposts in the matter
Wednesday, July 23rd, 2014
Saturday, June 21st, 2014So many Corporate Governance Questions flood instantly through my mind on how could Essar Oil and it’s Promoters can be so brazen ?
- In June 2014 Essar Energy Holdings Ltd conveyed to Essar Oil a Floor Price to delist of just Rs 108.18! ~ thankfully SEBI put the delisting on hold
- Essar Oil has recently announced that the Russian Oil Giant Rosneft will be acquiring a 49% stake in Essar Oil subject to due diligence and determination of the transaction price !…and the shares that will go to Rosneft will be from the 65.64% stake in Essar Oil through Global Depositary Shares owned by Essar Oil & Gas Ltd and Essar Energy
- Essar Oil promoters hold 90.54 % of the Equity of Rs 1449.52 crs (FV Rs 10) through straight holding of 24.90 % and 65.64% through Global Depository Shares held by Bank of New York Mellon…..However both BSE & NSE continue to mislead by showing only 24.90% under Promoters
- Just Imagine if Essar Oil would have been allowed to delist last year with a floor price of just Rs 108.18,the promoters would have required just Rs 1530 crs to buy out the 9.46% shares they did not hold!
- Just Imagine what Price they will be selling to Rosneft !?….I’m sure it would be over Rs 108.18 ! which would effectively have implied buying cheap from us minority shareholders only to pawn it much higher to Rosneft !
Need Monies !? Public are Suckers !….Minority Shareholders after all are a Minority !…..Make Monies ! Take it Private !…seems to be the Mantra here !
I refuse to believe that the Ruias & Rosneft were not already in parlays in June 2014 last year when the delisting endeavour with Rs 108.18 Floor price was announced ! .Delisting & Rosneft coming in stinks of a premeditated plan being executed
Now with Essar Oil kissing Rs 200 and with BSE giving the permission to delist after NSE & SEBI had cleared it too,what will be the new floor price ?
Obviously it will not be Rs 108.18!
What will take place earlier in the short term ? ~ Delisting or Rosneft acquiring 49% from Promoters ?
It has to be delisting or else Rosneft coming in will trigger an Open Offer by them and take their shareholding past 49%
And the Ruias will be crucified if they delist at a lower price than the price they will sell to Rosneft !
So the moot question is “WHAT IS THE SHARE PRICE AT WHICH RUIAS’ WILL SELL TO ROSNEFT!?”
AND THIS HAS TO BE ANNOUNCED BEFORE THE DELISTING EXERCISE IN THE INTEREST OF TRANSPARENCY !
Valuations floating in the Media Reports talk of valuing Essar Oil at US $ 7.2 B (@ Rs 45000 crs) in the Rosneft Deal….is this Enterprise Value that includes @ US $ 2.4 b (Rs 15241 crs) Long Term Debt at March 31,2015 or is this just the Market Cap Valuation ?
Market Cap of Essar Oil at @ Rs 200 is @ US $ 4.7 b (Rs 30000 crs) currently
If US $ 7.2 B is the Market Cap Valuation at which Rosneft deal is done then the Share Price computes closer to Rs 300 and thus floor price for delisting should be this…that’s 50% + gains from here …but if this is the Enterprise Value then the Market Cap values computes to US $ 4.8 b which is around today’s market cap and thus implying little gains going forward….the risk is that the Deal is at a lower price than @ Rs 200,in which case price will fall
I have a strong mind to urge SEBI and both BSE & NSE to announce Compulsory Delisting for Essar Oil at Rs 300 and which if they do,will also bar the Promoters Ruias and their Companies from the Capital markets for the next 10 years !
You’ll win any bet that they won’t do so !
😆 ….and I’m awaiting the Ruias invite to their Yatch in Europe !
Disclaimer : Clients and I have an interest in Essar Oil having sensed the delisting gameplay much earlier