Essar,anyone explain this???

Ifts

The billionaire Indian Ruia family will this week offer to buy back the part of Essar Energy it does not own for less than a fifth of what investors paid for shares four years ago, the Sunday Times said. The Ruias are working on the final touches of an offer that will be a blow to the London market’s reputation. Essar floated in 2010 for 420p a share but the family will offer no more than 75p. The company said on Friday the family’s holding company, which owns 75% of Essar, was considering an offer at a “modest premium” to the shares’ 60p price.

http://www.digitallook.com/news/21483059/Sunday_newspaper_round-up_Essar_Barclays_Rolls-Royce.html

edit: RNS - Statement regarding possible offer: https://www.share.com/find-investments/advanced-finder/company-overview/essar-energy/news/13978/?pass=1&story_id=21483387&rns=1

sabretoothtigger

75 would be a rip off. Its not a good time for a sale, all commoditys are down.
If you want a parallel then KAZ and ENRC last year also meant forced losses on those who had bought when iron, copper and oil were all much higher.
As margins have an exponential effect on these companies profits, this is a great time to buy in for long term and a nasty situation to have no choice to sell

Since ESSAR is a conglomerate and already owns most of London floated ESSR I guess that explains the low price.
A bidding war when its just a minority stake, I dont know. Personally I'd normally say at least double price is well possible in a takeover

120 or so would be bad still, they should have been able to go back to 300. So does seem like a rip off, not within the idea of stock floats to allow us investment long term.

Another minority float would be ABG, most of it is owned by ABX but I dont see them forcing us to sell because gold went down.
Nasty tactics, I hope LSE smacks them down but somehow I doubt it

Ifts

sabretoothtigger wrote: »

75 would be a rip off. Its not a good time for a sale, all commoditys are down.
If you want a parallel then KAZ and ENRC last year also meant forced losses on those who had bought when iron, copper and oil were all much higher.
As margins have an exponential effect on these companies profits, this is a great time to buy in for long term and a nasty situation to have no choice to sell.

Nasty tactics, I hope LSE smacks them down but somehow I doubt it

The Ruia’s takeover plan will fuel criticism that regulators have allowed a slew of foreign natural resource firms to seek liquidity and prestige with a London listing, but with little benefit to investors.

The business select committee has launched an inquiry into the impact of the ‘extractive industries’ on London’s reputation as a financial centre.

But it has yet to call witnesses from ARM, Essar or ENRC, taken private by its Kazakh founder-shareholders last year in the midst of a corruption probe by the Serious Fraud Office.

Read more: http://www.thisismoney.co.uk/money/markets/article-2560053/Essar-Energy-majority-owners-considering-offer-company-private.html#ixzz2tbZVPI93

The lead banker on Essar Energy’s stock market flotation nearly four years ago has emerged as a key figure in a plan by its largest shareholder to take the company private for a fraction of the price. Joe Seifert was a senior member of the team at JP Morgan Cazenove that was the sole adviser and a co-ordinator of Essar Energy’s listing in 2010 for 420p a share. – The Times

sabretoothtigger

LSE was telling them they had to sell at least a few percent at this price for liquidity.
So they'd be losing money to sell into market, instead they decide to buy back what is a very cheap deal.
Same for their bonds, they sold them at 100p and now I presume they are far less so its an easy way to reduce liabilities

Cant blame them exactly but it makes a fool out of anyone who believe they were a part owner of a business that could profit in future. Instead they were used like financing, being a minority is to be taken advantage of

I took up a few today but I dont suppose I will make any great gain. I hope it all falls through and only in some years does it rise

sabretoothtigger

Essar Energy's Stanlow refinery had a negative gross refining margin (GRM) of $2.61/bbl in the third quarter of 2013-14 fiscal. It is a reversal as compared to earning $7.22/bbl in the same period a year ago. In response to the poor performance, Essar Energy plc announced plans to invest $ 100 million to improve the reliability and efficiency at this refinery.

Some figures on Stanlow especially here

http://www.hydrocarbonprocessing.com/Article/3311038/Latest-News/Essar-Energy-to-upgrade-Stanlow-refinery-in-UK.html?ArticleId=3311038

GDB2222

The Ruias offered 70p per share. That has been rejected by a committee of minority shareholders. The share price is currently 71.5p, reflecting hope that the Ruias will up their offer a bit. Anybody care to speculate what will happen next?

Ifts

According to this story in the FT - Essar Energy independent directors reject Ruia take-private offer -

"The Ruias now have until a put-up or shut-up deadline on March 14 to come back with a formal offer for the company or abandon the move"

sabretoothtigger

Opps I didnt realise it was this bad.

http://www.morningstar.co.uk/uk/news/121634/be-wary-of-companies-with-majority-shareholders.aspx

London Stock Exchange also comes out of this debacle with egg on its face but
There is nothing to force them to go higher, since they already own 78% of the shares, which were trading at 66p before the derisory bid. Indeed, they could well have offered less than the market price and got away with it

I think the biggest hope is the workers union perhaps. As essar employees hold the shares, they are ripping off their own people which surely is a bad move.

I think the LSE forced this move with bureaucracy when if they wanted to regulate it should have not allowed a listing but all IPO banks get money from every share so who cares I guess

Ifts

City watchdog ready to tighten rules on buy-outs to protect minority shareholders -

The Financial Conduct Authority is looking to change the listing rules so a majority investor has to get the support of smaller shareholders to take a company private

sabretoothtigger

Didnt help apparently. The billionaires are to buy a share for 70p they sold for 420p

Very clever, Im sure its standard practise in places like India but appears exploitive
I added a very small amount but I expect its a waste of time and nobody else is interested or able even to buy a public share of a private company

http://www.law360.com/articles/534373/new-regulation-adds-questions-to-1-5b-essar-energy-bid