Even as lenders are struggling to get buyers for some high profile steel makers, a clutch of banks, led by State Bank of India, has taken over a mid-sized steel maker MSP Steel and Power through conversion of debt under the now scrapped S4A scheme.
A consortium of 12 lenders has picked up 44% stake in the company from the Kolkata-based promoters.
MSP Steel and Power, which clocked a revenue of about Rs 840 crore in FY17, is an integrated steel player with high-end steel capabilities at Jamgaon Raighar in Chattisgarh.
In June 2017, the Joint Lender Forum started working on restructuring the debt of MSP Steel and Power under the Scheme for Sustainable Structuring of Stressed Assets of the Reserve Bank of India which became popular as the S4A scheme and the case was forwarded to the Overseeing Committee which subsequently approved it in October.
In the wake of growing instances of non-resolution of non performing assets and emergence of National Company Law Tribunal as the destination of all insolvency resolution cases, Reserve Bank of India then scrapped schemes like S4A, CDR and SDR.
MSP Steel and Power on Tuesday said it has successfully implemented the restructuring scheme with its Lenders on March 31.
Under the scheme, about 12.86 crore shares were transferred from promoters, the Agrawal family, to the consortium of lenders, the company said in an intimation to the stock exchanges.
"The said scheme was earlier approved by the relevant authorities under the guidelines issued by the Reserve Bank of India. The lenders along with the company had earlier signed the Master Framework Agreement and share transfer confirmation agreement on January 24 confirming the implementation of the restructuring scheme," it said.
The company officials said, out of Rs 1,186 crore of debt, about Rs 581 crore was considered as unsustainable debt, of which Rs 128.58 crore has been converted into equity while the balance was converted into convertible debentures in favour of the lenders.
"Bankers will acquire equity shares from the promoters. The promoters' dilution of shareholding will be 44.4% of the equity shares as per S4A Scheme. Accordingly, out of Rs 530.97 crore (of unsustainable debt), Rs 128.58 crore will be converted into equity shares and remaining Rs 452.39 crore will be converted to optionally convertible debentures," the scheme approved in October said.
SMALL GAIN
- A consortium of 12 lenders has picked up 44% stake in MSP Steel and Power
- SBI has taken over the mid-sized steel maker through conversion of debt
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