Unpaid Lenders Owed $411 Million from Essar Group Concerned by Rosneft Transaction 

Lenders are deeply concerned by limited disclosure of transaction terms and use of proceeds given Essar’s track-record of failed deals and opaque inter-company transactions 

NEW YORK--()--The syndicate of lenders, including funds managed by Davidson Kempner Capital Management and several global financial institutions (collectively, “the Lenders” or “the Creditors”), who are together owed approximately $411 million by various entities within the Essar Group, including Essar Global Fund Limited, issued the following statement and an accompanying summary of the key facts concerning the company’s proposed sale of Essar Oil Limited (“Essar Oil) to a consortium including Rosneft PJSC, Trafigura Beheer BV and United Capital Partners (“the Transaction”).

Key Facts:

  • Essar Group has agreed to sell Essar Oil Limited and associated assets for roughly $13 billion in a transaction supported by a $3.9 billion bridge loan from VTB Group to the Essar Group
  • The Lenders, who are owed $411 million by Essar Group, have repeatedly asked for transaction details that Essar has refused to provide
  • The Lenders’ concerns are amplified by the Group’s long-running history of value-destructive financial transactions, and opaque inter-company dealings
  • The Lenders are reserving all of their legal rights and will pursue any and all appropriate legal actions against the parties involved in the Transaction to protect their interests

The Lenders issued the following statement:

While Prashant Ruia, the Chief Executive Officer of the Essar Group, has championed the Transaction as a historic opportunity to reduce Essar’s debt, we are unable to ascertain if the Transaction is in fact value-maximizing or even lawful from the perspective of the Creditors. This is despite our repeated requests for a proper ‘sources and uses’ analysis for the Transaction, which have been consistently met with deficient responses that provide inconsistent and misleading explanations.

Additionally, the Lenders are concerned that proceeds from the Transaction (if and when it closes), could be diverted to entities controlled by the Ruia family, thus evading the Lenders’ rights to those proceeds. We are troubled by fact that the Ruia family has private minority shareholdings in two of the companies that are receiving proceeds from the transaction and that those proceeds may bypass the corporate group.

We welcome any clarification or productive engagement from the Essar Group, but must take all possible steps to protect our interests. As such, we will pursue additional legal actions if, where and when appropriate.”

Contacts

Media:
Prosek Partners
New York:
Brian Schaffer, +1-212-279-3115, Ext. 229
bschaffer@prosek.com
or
London:
Frederick Duff Gordon, +44 (0)20 3440 5807
fduffgordon@prosek.com

Contacts

Media:
Prosek Partners
New York:
Brian Schaffer, +1-212-279-3115, Ext. 229
bschaffer@prosek.com
or
London:
Frederick Duff Gordon, +44 (0)20 3440 5807
fduffgordon@prosek.com