The purchase of Indian refiner Essar Oil by a consortium led by Russian oil company Rosneft has been delayed, the two sides said on Friday, because some Indian lenders to Essar have yet to sign off on the deal.
The $12.9 billion deal, in which Rosneft is set to take a 49 percent stake in Essar and another 49 percent will be split between commodities trader Trafigura and Russian investor United Capital Partners (UCP), was expected to close this month.
“The closing was postponed into April because the buyers were dealing with 28 Indian banks that had credit lines with Essar Oil,” a source close to the transaction said.
The source added that separate debt of holding company Essar Global was also affecting negotiations indirectly as some banks were lenders to both Essar Global and Essar Oil.
The deal, the largest foreign acquisition of an Indian company, would give Rosneft a foothold in the growing Indian market. Essar Oil operates a 400,000 barrel-a-day refinery in Vadinar on India’s west coast and sells fuels through its 2,470 filling stations across the country.
Russia’s second-biggest bank VTB, which is involved in financing the deal, said this week it hoped to finish the acquisition this week, but that 19 more days would be needed to settle all the payments.
“The parties are working towards obtaining the requisite approvals to complete the transaction. We are hopeful that the deal will be completed in the upcoming few weeks,” Essar said on Friday.
Two Russian sources close to the deal, announced during a visit to India by Russian President Vladimir Putin last year, had said the deal was set to complete on March 15.
Officially, all the parties had previously said the transaction was expected to close in the first quarter. A Rosneft spokesman confirmed on Friday the timing of the completion had slipped. UCP and Trafigura declined to comment.
The Economic Times reported last week that one of Essar’s creditors, India’s LIC, had demanded dues from Essar to give its clearance to the deal.
Like this report? Sign up for our daily newsletter to get our top reports.