Ruias-led Essar Group has concluded a $12.9 billion deal to sell its cash-rich Essar Oil to Rosneft and the consortium of Trafigura and UCP, but Indian lenders can get only ₹4,000 crore out of the ₹86,000 crore deal.
“Indian lenders, including LIC, with other insurance companies and banks, will get ₹4,000 crore from this deal,” said Essar Capital director Prashant Ruia. According to Mr. Ruia, this is the single largest ever de-leveraging exercise undertaken in Indian corporate history as the deal will bring down Essar Group’s debt by 50%. “At operating company level, our debts reduce by ₹35,000 crore and at holding company level, the debt comes down by ₹35,000 crore,” Mr. Ruia told The Hindu.
However, Indian lenders are getting a fraction from this deal considering debt of $5 billion will be transferred to the new promoters and another $5 billion will be used to repay debts of holding company Essar Global. Russia’s VTB own a majority of the Essar Global’s debt.
Lenders of Essar Steel and Essar Power are unlikely to get anything from this deal.
A part of the money would also be used to reward the minority shareholders as the deal was agreed at higher valuations than the price at which shareholders tendered their share in the share buyback offered by the company.
