Essar plans cut price exit from London market
ESSAR Energy looks set to be taken off the London market at a fraction of its entry price just four years ago, after a 70p-per-share plan was tabled yesterday by the embattled oil and power company’s biggest investor.
Essar Global Fund Limited (EGFL) had indicated on Friday it was preparing a bid for the 22 per cent of the firm it did not own.
Essar Group, run by the Ruia family, floated Essar Energy in 2010 at 420p per share, only to see the stock hammered by Indian tax disputes and delays at the firm’s coal mines. Yesterday’s proposal compares to Friday’s closing price of 66p and a 12-month high of 155p.
EGFL also plans to buy out Essar’s 2016 convertible bonds as part of a plan worth around £500m.
Essar’s board members who are independent from EGFL will consider the proposal, which is not yet a firm offer. The company stressed that the directors have a particular duty “to protect the interests of the company’s minority shareholders”.
Other firms with low free floats have come under fire for leaving smaller investors with no power, prompting the Financial Conduct Authority to issue a new set of listing rules in November, though the full package of safeguards will not come into force until mid-2014.
Some investors are unhappy with EGFL’s advances. “This potential bid is an example of cynical opportunism and should not be allowed to proceed,” David Cumming of Standard Life Investments said in a statement before the proposal was announced.