JSW makes another dash for troubled Italian steel mill

JSW bid for Lucchini in 2014 before it was sold to Algeria's Cevital Group and Aferpi was born

Sajjan Jindal’s JSW Steel is making a fresh attempt to buy Italian steel mill, Aferpi, formerly known as Lucchini, from its new owners, the Cevital Group.

It is understood that JSW Steel is in discussion with the management of Aferpi for buying the plant in Italy. An email sent to JSW Steel went unanswered. 

JSW Steel had bid for Lucchini in 2014, when it was placed under special administration after being declared insolvent, but the deal didn’t finally materialise. 

Lucchini had a capacity of 2.5 million tonnes (mt) and owned a blast furnace, a steel mill, a coke place, re-rolling and port facilities. JSW had made a piecemeal bid for the rolling facilities for about $100 million. Finally, Lucchini was acquired by the Algerian conglomerate, Cevital Group, and Aferpi was born. 

The Cevital Group had presented a 400-million euro investment plan for the plant at the time of acquisition, but that appears to have run into problems, and the conglomerate has been on the lookout for a partner.

Earlier this year, JSW, along with three consortium partners, including the owner of the Luxottica Group, had submitted a final bid for Italy’s loss-making 10-mt steel plant Ilva. The company, however, lost out to a group led by ArcelorMittal.

For JSW, Lucchini could be a back-up plan, explained industry sources. Back home, JSW Steel is expected to make a bid for stressed assets in India. It is particularly interested in Monnet Ispat & Energy and Bhushan Steel, which will give it a foothold in the east.

An acquisition would bring JSW Steel closer to its target of achieving an annual capacity of 40 mt over the next decade. 

At present, JSW Steel’s capacity is 18 mt a year. While Bhushan Steel has an annual capacity of around 5.6 mt, Monnet has a capacity of 1.5 mt, and Essar Steel 10 mt. Even before the insolvency process started for the 12 companies under the Reserve Bank of India directive, JSW Steel had bid for Monnet, one of the first companies in which lending banks had converted their debt into equity as part of strategic debt restructuring. However, lenders found the haircut implicit in the offer too steep and didn’t take a call.

For Bhushan Steel too, JSW had approached lenders with an offer for a debt takeover of Rs 20,000-22,000 crore, earlier this year. 

These proposals, however, now stand null and void, as both companies are going through the insolvency process under the Insolvency and Bankruptcy Code, and JSW Steel would have to make a fresh bid when the bidding process starts.