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Monnet Ispat's Lenders Approve Bidding Offer from JSW Steel - Aion Capital

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27 Feb 2018, 16:01 IST
Monnet Ispat's Lenders Approve Bidding Offer from JSW Steel - Aion Capital

In a recent update on Monnet Ispat and Energy Ltd (MIEL) bankruptcy case, the Committee of Creditors (CoC) has approved the only bidding offer made by the consortium of Aion Capital and JSW Steel. The offer includes a payment of INR 2,450 crore to the lenders and equity funding of INR 1,050 crore. The company owes a total amount of INR 10,237 crore. The remaining debt has been acquired by the consortium for INR200 crore.

In Jun'17, Monnet Ispat along with 11 other entities was identified as the 12 big bad loans by RBI (Reserve Bank of India) against which bankruptcy proceedings were filed at NCLT (National Company Law Tribunal). The case was filed by MIEL's lead banker, SBI (State Bank of India).

As per the market reports, Aion Capital is a joint venture between ICICI Venture and Apollo Global Management. While Aion Capital holds 70% stake in the consortium, JSW Steel has remaining 30%. Also, this consortium will have 75% stake in MIEL, 18% will be held by lenders, and remaining 3% will be in the hands of company's existing promoters.

JSW Steel is likely to keep the newly acquired assets of MIEL separate from its own entity. This is because the company is currently focusing on the turnaround of distressed assets and would consider a merger only when the assets would become profitable.

JSW Steel is one of the largest steel manufacturers in India with an integrated capacity of 18 MnT and plans to expand its capacity to 23 MnT by 2023. Thus acquiring assets of MIEL is a plan of its expansion strategy in Chhattisgarh as it could save raw material logistics cost by acquiring iron ore from the merchant miners in Chhattisgarh.

Monnet Ispat was started in the year 1994, and has 1.5 MnT integrated steel plant, sponge iron plant, pellet plant, sinter plant and captive power plant in Raigarh, Chhattisgarh. The following table shows configuration MIEL's pant in Raigarh:

Unit Capacity (MnT per annum)
Sponge iron unit 0.70
Blast furnace 1.00
Ferroalloy plant 0.075
Electric furnace 1.74
Rolling mill & Pellet 1.20
Palletisation plant 1.20*
Sinter plant 1.50
Coal Beneficiation plant 1.00
Power plant 240 MW

*Proposed capacity enhancement to 2.20 MnT per annum
Source: MIEL

 

27 Feb 2018, 16:01 IST

 

 

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