Essar Group's Chief Executive Officer, Prashant Ruia, said that the company's deal that will eventually give Rosneft (ROSN.MM), Trafigura (a commodities trading house) and United Capital Partners (private investment group), a 98 percent stake in Essar's oil arm is "US-sanctions compliant".
Said sale, which was signed on Saturday, is the biggest foreign acquisition in India and Russia's biggest outbound deal.
According to Ruia, the sale of India's Essar Oil did not violate any economic sanctions imposed by the U.S. government on Russian entities over Russia's role in the Ukraine crisis.
"The way it is structured, it is fully compliant. We are well within the rules that govern Russian companies."
Controlled by the known-billionaires Ruia brothers, Essar operates for oil and gas, steel, ports and power. However, its lenders put the company under pressure for the reduction of its debts.
In an interview with Reuters on Sunday, Ruia claimed that the sale was an emotional decision. It was a difficult decision for the people involved in the company and for those who were involved in the business and building it.
"We felt all in all, we were getting attractive valuations and we decided to sell," Ruia said.
DECREASING DEBTS
According to Ruia, Essar is planning to use the proceeds from the sale to compensate at least 50 percent of the company's debts on their group companies upon perfection of the deal.
Ruia said that Essar's debt would be cut by almost $5 billion and a further $5 billion would be used for the trimming of the company's debt at the operating company level.
Debt-laden Essar Steel carries debt of over $5 billion and had been seeking to restructure its debt. It owns a 10 million tonne steel plant in the western state Gujarat.
Essar Global Fund Limited is an Indian conglomerate group based in Mumbai, India. The Fund is a global investor, controlling a number of world-class assets diversified across the core sectors of Energy, Metals & Mining, Infrastructure (comprising ports and EPC businesses) and Services (primarily comprising shipping and BPO businesses).
Join the Conversation