 "Essar Energy")
India's billionaire Ruia family, which has stuck to the 70-pence-a-share offer in its formal bid for buying out minority stakeholders in its London-listed Essar Energy, has again run into opposition from the company's committee of independent directors. Slamming the offer, the committee has asked holders of shares and bonds to take no action till further announcements are made.
The formal offer, representing a premium of approximately 17 per cent on the 60 pence an Essar Energy share closing price on February 13, values the remaining stake and convertible bonds in the company at $793 million.
Earlier in February, Essar Global Fund Ltd (EGFL), promoted by the Ruia family, had made an informal offer to buy the 22 per cent stake in Essar Energy that it did not already own at 70 pence a share. It had also proposed to acquire 4.25 per cent convertible bonds due in 2016 guaranteed by Essar Energy. While the five-member independent board committee had rejected the proposal, minority shareholders like Henderson Global Investors and Standard Life had expressed their displeasure by terming the offer opportunistic.
| NO EXIT IN SIGHT |
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EGFL will now have to make the offer document available to share and bond holders within 28 days. After that, it might have to give them three to four weeks to respond, as it would require 90 per cent share and bond holders' approval for completion of the buyout offer.
"It could be a long-drawn process now, with the independent committee taking a strong position," said a person familiar with the development. Essar Energy's assets include the Stanlow oil refinery in Northwest England, besides power stations and oil-refining facilities in India. It raised £1.3 billion by listing its shares on the London Stock Exchange at 420 pence apiece in 2010. Since then, the stock has fallen significantly; the shares closed at 60 pence apiece on Thursday.
"The loss for EGFL has been more than $6 billion and there is a concern over further deterioration in the share price of Essar Energy and the impact on EGFL and other stakeholders," EGFL said in a statement on Saturday.
The Ruia brothers, whose interests span energy, telecom, steel and shipping, had a combined net worth of about $4.9 billion as of March 2014, according to Forbes. "Our offer to minority shareholders represents a premium that is in line with precedent UK minority buyouts and we believe the acquisition is the best solution to address the challenging future that lies ahead," the statement added.
NO EXIT IN SIGHT
| Apr '10: Essar Energy lists on LSE at 420 pence a share
| 14 Feb '14: EGFL makes informal offer of 70 pence a share for minority holding
| 24 Feb '14: Independent committee rejects the offer at 70 pence a share
| 14 Mar '14: EGFL makes formal offer at 70 pence a share
