Essar Oil stock zooms as board approves delisting proposal
23 June 2014
The Essar Oil stock hit the upper circuit in early morning trade on the stock exchanges after the company's board approved delisting of its stock on the Bombay and National stock exchanges.
Essar Oil was locked in upper circuit at Rs113.80, up 4.98 per cent, at 9;30 am on the Bombay Stock Exchange.
Essar Oil, a unit of India's diversified Essar Group, said its board met on Sunday to decide on the proposal.
As of now Essar Oil's total public shareholding is 27.53 per cent.
Upon approval, the company will make an offer to buy back 137 million shares or a 27.53 per cent stake held by the public.
Essar Energy Holdings, the promoter, will now seek approval of the public shareholders through postal ballot to pass a special resolution to go ahead with the delisting proposal.
The London-listed Essar Energy Plc, which owns Essar Oil, has already delisted from the London Stock Exchange earlier this month as part of the group's strategy of taking its entire hydrocarbon and energy business private to acquire more operational and financial flexibility for the business.
It is, however, not sure how many public shareholder would vote in favour of the delisting proposal, which should be at least twice the number of votes against it.
Also, the promoter group may not accept the 'discovered price' if it perceives it to be too high. Delisting may not also happen if the minimum tender condition is not met.
Unless Essar Oil's promoter group is able to increase its stake in the company from 72.47 per cent currently to 90 per cent, the delisting offer will fall through.