Essar pumps $150 mn in US arm

The West Virginia-based resource company was acquired by the group for $600 mn four years ago

Essar infused $150 million (Rs 939 crore) into its bankrupt American coal company Trinity Coal. This is part of a plan to re-organise the company and help it emerge from a bankruptcy that involved settling $325million (Rs 2,034 crore).

The deal was closed on last Thursday, and Trinity will continue its mining operations in Kentucky and West Virginia. Essar will receive 100 per cent of the common equity. The restructuring plans were approved by a bankruptcy court in the Kentuky province.

“Holders of allowed general unsecured claims are expected to receive $0.15 to $0.25 on the dollar, pursuant to Trinity’s disclosure statement,” said a press release by the investment banker of the deal, Moelis & Company.

The funds will be infused through Essar Global Fund, through its affiliates. Trinity Coal was acquired by Essar for $600 million (Rs 3,756 crore) four years back.

Trinity had filed  for Chapter 11 bankruptcy in February last year after its vendors filed petitions in the court as their payments piled up. Almost 96 per cent of the creditors voted for the plan.

“Trinity’s recapitalisation was facilitated by a dual-track global 363 sales process and stand-alone reorganisation plan that ultimately resulted in maximising the value to all Trinity stakeholders while enhancing the company’s liquidity and financial flexibility,” said Jared J Dermont, a managing director at Moelis & Company.