Essar Oil surges to Rs 200+ on SEBI Order for Delisting ~ 5 Questions for SEBI !
Essar Oil again seems to be getting away !
SEBI should have shown some muscle and teeth and independence in ordering either :
- Compulsory Delisting of Essar Oil for the all the continuing Corporate Governance Issues it keeps raking up heedless to minority shareholders concerns and even other warnings! or
- Delisting only post announcement of Price at which Russia’s Rosneft is negotiating under an understanding written agreement to acquire a 49% stake in Essar Oil ~ what’s the hurry by Essar Group to delist Essar Oil now before they announce Rosneft Deal price !
Instead Essar Oil Promoter Company,Essar Energy has received what it sought from SEBI …a relaxtion on timelines of two months from the date of November 6,2015 the SEBI Order for the voluntary delisting and Five days instead of two days for the despatch of documents to shareholders and permission to delist
Essar Energy ,who filed the SEBI Application for Relaxtion in timelines,of course has agreed ( like it had any other choice !) to :
- Revise the Floor Price in the Delisting upward from what it had declared in 2014
- Pay the difference subsequently ,if any, to shareholders who tender their shares in the delisting offer and which are accepted, between the Delisting Price & the Price negotiated with Rosneft for taking over 49% of the Equity
If you recall Essar wanted to delist at a floor price of just Rs 108 in 2014,even before they announced the Rosneft Deal being negotiated ! ~ I had raised serious corporate governance questions then and was quoted in the media for these ….fortunately SEBI put the Essar Oil delisting on hold at floor price of Rs 108
But now I have 5 questions for Prashant Saran of SEBI who has signed this Seven Page Order and I’ve re-read it !
- Why do you not proactively consider Compulsory Delisting for Essar Oil for the ever growing Corporate Governance Issues so as to invoke a 10 year ban on it’s Promoters from accessing Capital Markets again?
- Why allow the Voluntary Delisting before the several complaints received by you as cited in the SEBI Order have been resolved ~ particularly the Accounting & Non Disclosure in Accounts Complaints which you are referring to ICAI for investigation ?
- Why allow the Voluntary Delisting before Rosneft Price is announced !?
- SEBI Order is silent on this ~ What is the status of those Minority Shareholders who decide not to participate in the Delisting but wish to decide on this later for Essar Group to buy their shares out only after Rosneft Deal Price is announced !?
- Don’t you think in interest of Investor Awareness & Protection it should be made mandatory for SEBI to put up on it’s website the names of all listed companies where investigations are pending proactively or reactively on complaints or for any other reasons along with the details of the matters being investigated ?….this has been a long standing view of mine for several years as it will greatly help in managing investing risks before any SEBI Order is actually made
No 4 above is important now that SEBI has allowed the delisting ~ The Order is explicit in that Essar Energy will be responsible to pay any difference between delisting price and Rosneft fixed price within a specified time of two months of public announcement to only those shareholders who have tendered their shares in the delisting and which have been accepted ! ~ what about other shareholders who have not participated in the delisting or whose shares have not been accepted in the offer !? ~ they too should get the full Rosneft Price if higher than the delisting price ! ~ this cannot be assumed and needs to be explicit in the Order !
I’m sure this is an oversight by SEBI !
Whatever !….my view remains on what SEBI should have done as expressed in the two options at the beginning of this blogpost !
I have been vocal on the corporate governance issues in the Essar Oil Delisting Endeavour from 2014 and have been quoted in mainstream media for this…..read these past four blogposts to get a sense of the attempt to short circuit the interests of minority shareholders
Monday, July 20th, 2015
Monday, July 6th, 2015
Wednesday, July 23rd, 2014
Saturday, June 21st, 2014