Steelmaker owed banks Rs 10,000 crore but the AION Capital-JSW Steel consortium got the company for Rs 2,850 crore only
Distressed assets fund AION Capital and JSW Steel consortium has won the bid to take over the steel company Monnet Ispat following a court order from the Mumbai bench of the National Company Law Tribunal (NCLT). With dues of Rs 10,000 crore to bankers and Rs 440 crore to operational creditors, the committee of creditors (CoC) unanimously voted for a 75% haircut with AION Capital –JSW consortium paying only Rs 2,850 crore.
"The resolution plan was approved by the Monnet Ispat's committee of creditors (CoC), led by State Bank of India (SBI) with a 98.98% majority vote," said a banker. "Banks will also hold some equity in the company so that when there is an upside in the share price after the new management team takes over, we stand to gain," the banker said.
Monnet Ispat is one of the dirty dozen identified by the banking regulator to be tried under the Insolvency and Bankruptcy Code (IBC) 2016. The steel company just had a single bidder-AION Capital-JSW Steel, leaving the banks with little choice other than selling the asset. AION Capital holds a 70% stake in the consortium while JSW Steel holds the rest.
This will be the third big resolution under the IBC 2016. The first case that was resolved under this process was Tata Steel which acquired Bhushan Steel with a 30% haircut, Vedanta's takeover of Electrosteel with a 60% haircut and Reliance Industries-JM Financial ARC consortium that won the bid for Alok Industries with a 83% haircut.
On June 12 when the case had come up for hearing in the division bench of the NCLT the court had noted that the resolution plan voted by the CoC failed to have any settlement towards government dues as well as operational creditors and that the bidders are getting a prized asset at an attractive prize.
The court had said "When you are getting a company for Rs 2,850 crore whose fair market value is over Rs 4,000 crore, then you should make at least some provision for small operational creditors," the Mumbai bench of NCLT said, while hearing the case. "You can eliminate big operational creditors that are listed companies or major corporations, but you have to think about micro and small enterprises." The AION-JSW consortium has also kept aside Rs 25 crore to be paid to operational creditors.
FINALLY RESOLVED
- Steelmaker owed banks Rs 10,000 crore but the AION Capital-JSW Steel consortium got the company for Rs 2,850 crore only
- The resolution plan was approved by the Monnet Ispat's committee of creditors (CoC), led by State Bank of India with a 98.98% majority vote
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Steel")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}