Essar Oil's board has agreed to its promoters' proposal to delist the company from Indian stock exchanges.
After delisting Essar Energy plc from London Stock Exchange (LSE), the Ruia brothers-controlled Essar Group on June 20 had announced its intention to delist Essar Oil from Indian bourses.
Essar Oil in a statement said its board of directors met on Sunday to consider the delisting proposal.
It agreed "to consent to the delisting proposal pursuant to and in accordance with Regulation 6(I)(e) of SEBI Delisting Regulation".
The board agreed to seek the consent of the shareholders of the company for the de-listing proposal by way of postal ballot and e-voting.
In a notice to Bombay Stock Exchange (BSE), Essar Oil said it had received a letter from its promoter Essar Energy Holdings Ltd (EEHL) for voluntarily delisting the company's equities from BSE and National Stock Exchange (NSE) by purchasing shares held by public.
Mumbai-based Essar Group wants to buy all the shares it doesn't already own in Essar Oil. Turning it private would give billionaire brothers Shashikant and Ravikant Ruia a free hand to revamp the companies.
Currently, the company's public shareholders hold 137.123 million equity shares, which is 27.53 per cent.
Ruia-brothers' holding firm - EEHL, a company incorporated in Mauritius - holds a 71.22 per cent stake in Essar Oil.
The delisting proposal, EEHL said, was a part of its business strategy of taking the entire hydrocarbon/energy business private (unlisted) following the delisting of shares of Essar Energy plc from LSE on June 10.
"EEHL believes that the company requires sustained, substantial investment to develop and grow its businesses (especially the refining and marketing business). Full ownership of the company will provide EEHL with increased operational/financial flexibility to support the company's businesses and strategic needs," the promoters said in the letter to Essar Oil.
The proposed delisting was in furtherance of the strategic intent of the promoters to achieve greater flexibility for equity infusion into the company.
"EEHL believes that the delisting of the company's equity shares will be in the interest of the public shareholders of the company as it will provide them with an exit opportunity from the company at a price determined in accordance with the reverse book building mechanism set out in the SEBI Delisting Regulations," the promoters said in the letter to Essar Oil.
The price payable by EEHL for the acquisition of the public shareholders' shares would be the price at which the maximum number of shares is tendered in a reverse book-building mechanism.