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|Oil & Gas Producers
Real-Time news about Essar Energy (London Stock Exchange): 0 recent articles
|idle dreamer: Essar Energy Minority Owners Face Friday Deadline for Sweetener
By Selina Williams LONDON--Minority shareholders in oil company Essar Energy PLC are expected to find out Friday whether its Indian owners will raise their offer to buy them out, in the latest in a string of shareholder controversies that have damaged the reputation of London-listed emerging market resource companies. The billionaire Ruia brothers have until 1700 GMT Friday to make a formal bid for the 22% of Essar they don't already own. Last month the pair--Shashi and Ravi--made an informal offer of 70 pence per share through their Essar Global Fund investment vehicle, a far cry from the 420 pence price at which Essar floated in April 2010. Late Thursday, Essar was trading at 67 pence a share, a sign investors don't expect a significantly higher offer. An independent committee of Essar Energy's board has already said the brothers' offer didn't reflect the company's true value and future growth prospects. The initial offer triggered a 28-day period during which the Ruias could complete the deal terms, a period which ends Friday, or request an extension to Friday's deadline. If no offer is forthcoming, Essar Global would have to wait six months to make another offer. David Cumming, head of equities at Standard Life Investments, a top 10 Essar Energy investor, said Essar Global's attempt to buy out minority shareholders was "a calculated attempt to deprive minority shareholders of the substantial future upside in Essar Energy's valuation." The sharp fall in Essar Energy's share price in late 2013 worried management at Essar Global and prompted them to look into buying back the minorities stake, a person familiar with their position said. "They [Essar Global] were left with no choice but to take radical action, " said the person. The informal offer amounted to GBP900 million ($1.5 billion) offer to buy out minority investors. Current U.K. rules effectively allow a shareholder with over 75% of a company's shares to push through a buyout, because a stake of that size means they can unilaterally pass so-called company special resolutions. That means minority holders risk being left with a stake in a private company and no way of protecting their investment. "What is happening [at Essar] is a classic illustration of the dangers of shareholders investing in a company where they are a significant minority. These are lessons shareholders will apply elsewhere," said one investor who bought into Essar Energy's initial public offering but who has since exited the stock. The situation at Essar follows corporate governance battles involving major shareholders at Indonesian coal miner Bumi PLC and Kazakhstan-focused Eurasian Natural Resources Corp. PLC. Bumi became embroiled in a long-running boardroom battle that pitted its former 48%-owners the Bakrie family against financier Nat Rothschild. ENRC was taken private last year by its oligarch founders and the Kazakh government after the company's share price slumped. U.K. market regulator the Financial Conduct Authority is already consulting on new rules that would offer more protection for minority investors. But it also doesn't want to deter global resource companies from listing in London, especially as the IPO market ramps up. Nigerian oil company Seplat said this week it plans to float a 25% stake on both the London and Nigerian stock exchanges, raising $500 million primarily to fund acquisitions. The company's Nigerian founders will remain its largest shareholders, along with French energy company Maurel & Prom SA. "Perhaps we won't see quite as many companies coming here now because the investor base will be a bit more cautious, but that could overall be beneficial to respect for the market in London," said a person familiar with company flotations. At the time of its $2 billion flotation, the Ruia brothers' success in building Essar Group from a small construction firm into a conglomerate boasting steel, energy, shipping and infrastructure businesses, seemed to bode well for its energy arm. Essar Energy still boasts assets worth $16 billion, according to the company's website, including the giant Vadinar refinery and coal resources in India, seven power plants in India and Canada, and oil and gas blocks around the world. In a sign of confidence, it bought of Royal Dutch Shell PLC's Stanlow oil refinery in the U.K. for $350 million in 2011. But a string of setbacks, including regulatory delays in India, an unexpected tax bill of around $1 billion and weak refining margins, ate into revenue and increased its debts. India's weaker-than-expected economic growth and a currency depreciation also hit profits. "The risks of the business," said the investor who exited the stock "were woefully underestimated."|
|undervaluedassets: Uncharted territory for the shareprice now.
All time low at the close today.
But then it is hard to target a meaningful upside Share price when you make nothing but losses.|
|dimpkins: I presume FTSE inclusion is on the back burner given the share price fall? Essar Global Fund Ltd stated "believes that the shares of Essar Energy represent exceptional value" that was at approx 97p|
|undervaluedassets: So Essar global fund set to sell huge amount of stock? how can that be good for the share price?|
|tenapen: The ESSR share price is finding 144p difficult to break and hold.|
|turborock: Decent news. Share price is even reacting in a positive way. Whatever next?|
|gerri-c: Even with the issues this company has had perhaps people have begun to realize the value in their stock. Merrill Lynch forecast a doubling of the March share price, setting a target price of 265p. (That would be nice)|
|woozle1: I was looking at recent broker notes. When the /sp was around £1 the notes advised to wait until the situation had clarified. Now that share price has risen to 1.50, the advise is to buy but noting has changed. It just goes to show how share price movements justify prices and not the business.
|bobsidian: "bob how do you imagine the share price would react to anything positive?"
Or the flipside would be how do you imagine the share price would react to further negativity.
Take your time.
Consider all outcomes.
The story is NOT good. If the story was so good do you honestly think the share price would have fallen as far as it has. A conglomerate primarily funded by extraordinary levels of debt accessing equity markets in an attempt to reduce that indebtedness. What is the debt maturity profile of ESSR ? This share has been a short sellers dream. A FTSE100 company with a share price performing over the course of the last 12 months like an AIM listed share.
But in the interim the share price fall since early November looks a bit too precipitous and suggests a technical rebound to at least recover part of that fall and perhaps rally back to around £1.60 or even as high as £2.00.|
|bubloo: I think this is great opportunity to get into Essr. The directors have not been charged for corruption but if any wrongdoing at all probably misreprentation of the percentage Essr hel of loop when they applied for the licences. I personally feel this should not cause a 20 % fall in share price.all major industrial houses have been implicated in this telecom issue in India and their share price has not fallen as Essr. Essr is probably the only group that had not been earlier. I am thinking of buying this stock.
If any one else has a view I would be much obliged if you could post please
Essar Energy share price data is direct from the London Stock Exchange