The joint lenders' forum comprising 23 banks and financial institutions gave the go-ahead for the sale of Essar Oil Ltd. to Rosneft Oil Co., two bankers with direct knowledge of the matter told BloombergQuint requesting anonymity.
The nod paves the way for Rosneft to acquire 98 percent in the refining and retail business of the Essar group.
The consortium, led by ICICI Bank Ltd. and State Bank of India Ltd., agreed to release the shares of Essar Oil to facilitate closure of the stake sale to Rosneft and the investment consortium led by Trafigura and UCP. Igor Sechim, chairman of Rosneft, announced at its shareholder meet on Thursday that the Essar Oil transaction can now be “considered as closed”.
The proceeds of the deal are important since a clutch of domestic lenders to Essar Oil are to be paid a portion of it as repayment. In the past, Prashant Ruia, chairman, Essar Oil, had indicated that a portion of these funds would also be used to retire the group-level debt.
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The Essar Oil-Rosneft deal was signed during the BRICS meeting in Goa in October 2016. The all-cash transaction involves the sale of its pan-India network of 3,500 fuel retail outlets, its 20 million tonne per annum Vadinar refinery, along with 1,010 megawatt captive power plant and the 58 million tonne deep-draft port.
Life Insurance Corporation of India has also given its approval for the transaction, according to the bankers cited above. The deal is expected to close in July.
An Essar Oil spokesperson did not respond to an emailed query from BloombergQuint.
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