Rosneft Acquires 49% of Essar Oil Limited
· Vadinar refinery (included in the framework of the deal) throughput capacity is 20 MTA, conversion rate - 95.5%
· The implementation of the .deal will secure the access to the Indian market - one of the fastest growing markets of Asia -compound GDP growth within 2013-2016 of 29.8%
Rosneft announces the signing of the Sale and Purchase Agreement for a 49% stake in Essar Oil Limited (hereinafter - "EOL") from Essar Energy Holdings Limited and its affiliates. Rosneft Board of Directors unanimously approved the deal on October, 13, 2016.
Rosneft acquires 49% of the Vadinar refinery, one of the most sophisticated refinery in the Asia-Pacific region, possessing a complex infrastructure. EOL's business also includes a vast network of 2.7 thousand Essar branded retail outlets across India.
The cost of the acquisition of 100% of EOL's business by Rosneft and a consortium of international investors (with Trafigura being one of its members) is USD 12.9 bln. In accordance with the set procedures a large international investment bank presented a report on the fairness of the valuation of the deal. The price for 49% to be acquired by Rosneft will be subject to the actual net debt and net working capital as of the date of deal closing.
The procedures, necessary for the completion of the deal, including the consents of international anti-monopoly authorities, will be undergone by the end of 2016.
Acquisition of the stake in one of the largest and most sophisticated refineries in India will enable Rosneft to enter the high-opportunity Indian market and boost the positions of the trading arm of the Company in the Asia Pacific region. Key synergies sources will be represented by the possibility to process heavy oil from Venezuela and cross-supplies of oil products to APR markets. This will allow raising the economic efficiency of the refinery (GRM), which since the begging of EOL's financial year (started in April 2016) exceeded USD 10/bbl.
The refinery currently demonstrates strong operational performance: the average GRM since the begging of EOL's financial year (started in April 2016) exceeded USD 10/bbl.
Igor Sechin, Rosneft's CEO, in his comments on the deal said: "This is a significant milestone for the Company. Rosneft is entering one of the most promising and fast-growing world markets. At the same time, this project provides unique opportunities for synergies both with the existing assets of the Company and Rosneft's future projects, and opens a big potential for expansion of its presence on the markets of other APR countries, such as Indonesia, Vietnam, the Philippines and Australia".
The deal is being implemented with the assistance of VTB Capital, which acting as an exclusive financial advisor of EOL's current shareholders.
Note for editors:
Vadinar's current throughput capacity is 20 MTA. In terms of its throughput, Vadinar is second biggest refinery in India, and in terms of the Nelson complexity index, it is one of the top ten refineries of the world. The refinery is highly flexible in terms of raw materials use and is capable of refining heavy and sour oil grades. The refinery has access to a deep-water port capable of receiving super large VLCC tankers. The existing assets of the company generate a stable cash flow sufficient to meet all of its obligations and to finance its development program. Essar Oil Limited also owns a network of 2.7 thousand retail sites across India. Deregulation of pricing at the Indian retail market opens perspective of retail sales growth. The company plans a significant expansion of its retail network.
Rosneft Information Division
Phone:+ 7 (499) 517-88-97
October 15, 2016
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