The feuding promoters of Usha Martin have decided to bury their differences temporarily to allow the sale of the company's steel plant to Tata Steel group company Tata Sponge Iron Ltd (TSIL).
The Prashant Jhawar faction, the co-promoter and ousted chairman of Usha Martin with more than 25% shareholding, has decided to approve the deal at the upcoming meeting of the shareholders. Jhawar, however, is still critical of the current management headed by Rajeev Jhawar and might pursue the legal case he is currently fighting in the court.
"In order to facilitate the deal, we have instructed our lawyers to support the resolution for the sale of the steel division of Usha Martin to TSIL at the forthcoming shareholders meeting. We have also conveyed our decision to the lead banker, State Bank of India," Jhawar said on Monday.
Both Prashant and his father Basant Kumar Jhawar, now acting in concert, own 25.5% stake in the company and their votes are crucial at the upcoming Extra Ordinary General meeting of the company to be held on November 10 in Kolkata.
"We are confident that TSIL will run the assets in the way they deserve to be administered and enhance the legacy," a statement from the London-based Prashant Jhawar said.
The faction controlled by managing director Rajeev Jhawar, Basant's nephew, however, is yet to settle the legal dispute started by Prashant following his ouster.
And going by Prashant's statement and proceedings at the Calcutta High Court, the dispute is likely to linger on and may even turn nastier.
"We are doing this (voting in favour of deal with Tata Steel) even though our concerns over specific utilisation of sales proceeds towards repayment of term loan, working capital, unsecured and operating creditors and, more particularly, the contingent liabilities in the residual business," Prashant's statement said adding that his concern about the settlement of contingent liabilities of Rs 860 crore, including claims from Jharkhand government, pertaining to irregularities in the mining as well as possible diversion of funds remain unaddressed.
Both Prashant and Rajeev factions of Usha Martin have got into a temporary agreement to make way for the Rs 4,525 crore deal with the Tatas that includes a 1 million tonne steel plant coupled with a coal and iron ore mines. However, Prashant has upped the ante in the court, claiming that a loan was fraudulently secured from State Bank of India when bank officials colluded and conspired with the current management causing prejudice to the company.
MELTING DOWN
- Rs 4,525 cr – Value of the steel division to be sold to Tata Sponge
- Rs 860 cr – Contingent liabilities of Usha Martin
- Ousted chairman Prashant Jhawar has backed the deal
- 25% stake – Prashant and his father Basant Kumar Jhawar own in Usha Martin
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Both Prashant and his father Basant Kumar Jhawar, now acting in concert, own 25.5% stake in the company and their votes are crucial at the upcoming Extra Ordinary General meeting of the company to be held on November 10 in Kolkata.
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