Steel deal: Creditors approve Aion-JSW bid for Monnet Ispat Energy

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Mumbai | Published: April 11, 2018 5:54:20 AM

Aion Investments and JSW Steel have won the approval of creditors, snapping up the bankrupt Monnet Ispat & Energy for an estimated Rs 3,500-4,000 crore.

JSW Steel, steel, steel industry, steel sectorJSW Steel is one of India’s leading steelmakers with a total capacity of 18 million tonnes per annum.

Aion Investments and JSW Steel have won the approval of creditors, snapping up the bankrupt Monnet Ispat & Energy for an estimated Rs 3,500-4,000 crore. The steelmaker’s total outstanding debt is more than Rs 12,000 crore, indicating lenders may have taken a huge haircut.

“As an upfront payment, the lenders are likely to receive around Rs 2,750 crore,” a person familiar with the development told FE on condition of anonymity.

Monnet Ispat said on Tuesday said a committee of creditors (CoC) has approved the resolution plan submitted by Aion Investments and JSW Steel by a 98.97% vote.

“In addition to repaying the dues to the lenders, the resolution plan also includes some investment in Monnet Ispat’s plant,” the person quoted earlier said.

The meeting of the CoC, led by the State Bank of India, was held on April 7, where the resolution plan was presented to the CoC. The voting commenced on April 9 and ended on April 10, the company said in a stock exchange notification.

The insolvency resolution process for Monnet Ispat began on July 18, 2017, under the provisions of the Insolvency and Bankruptcy Code, 2016. Sumit Binani was appointed as the resolution professional (RP).

On March 3, the company had said the plan received from the Aion-JSW consortium has been circulated to all the members of the CoC for obtaining internal approvals so that the resolution plan could be put to vote in the last week of March.

Monnet Ispat owns an integrated steel plant of 1.5 million tonnes per annum along with associated facilities including sponge iron plant, pellet plant, sinter plant and a captive power plant in Chhattisgarh. It also owns coal beneficiation facilities in Chhattisgarh and Odisha.

The company was one of the top 12 accounts to be referred to the National Company Law Tribunal last year. For FY17, the company reported a consolidated net loss of Rs 2,129 crore on net sales of Rs 1,238 crore, according to data from Bloomberg.

Given the indicated value of the resolution deal, it appears that lenders will need to take a significant haircut on their outstanding loans to the beleaguered steelmaker, as part of the approved plan.

JSW Steel is one of India’s leading steelmakers with a total capacity of 18 million tonnes per annum. It has plants in Karnataka, Tamil Nadu and Maharashtra. JSW Steel has also joined hands with Numetal to bid for Essar Steel.

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