Committee of creditors accepts revised bid from JSW-AION for Monnet Ispat

The committee of creditors has accepted the revised offer from the JSW Steel-AION Capital combine for Monnet Ispat and the deal is expected to be announced soon after legal scrutiny. The combine was the only bidder for the asset.

AION is a private equity fund formed through a strategic partnership between ICICI Venture and Apollo Global Management. 

JSW-AION has agreed to pay the creditors an additional Rs 2 billion over and above the Rs 27 billion agreed upon earlier, apart from agreeing to increase the equity holding of the lending banks from 8 per cent to 16 per cent. 

In the earlier plan, 8 per cent was to be given to the Jajodias, the promoters of the company. Sources said the promoters had been clubbed with public shareholders. Even under this offer the banks will have to take a haircut. 

AION Capital, when contacted, declined to comment on the issue. 

There are some questions on the deal because many others such as Tata Steel, which had earlier shown an interest in the asset, backed out, leaving one bidder in the field. Apart from Tata Steel, a clutch of private equity players had earlier shown an interest in the company.

Though the rules do not prohibit a single bidder, there were apprehensions that the bid might not fetch the right price. 

The committee called the combine for negotiations, in which it had been asked to up the offer and increase the lenders’ stake.

Monnet Ispat has debts of Rs 103 billion. It owns a 1.5 million-tonne integrated steel plant, along with a 0.8 million-tonne sponge iron plant, a 2 million-tonne pellet plant, a 0.96 million-tonne sinter plant, and a 230-Mw captive power plant in Chhattisgarh. 

The company also has 7.5 million tonnes of coal beneficiation facilities in Chhattisgarh and Odisha. Monnet was among the first stressed companies to get resolution plans from prospective bidders. It is among the 12 large corporate loan defaulters referred by the Reserve Bank of India for insolvency.