NCLT approves JSW Steel-AION resolution plan for debt-laden Monnet Ispat

The Mumbai Bench of the National Company Law Tribunal (NCLT) on Thursday approved the resolution plan for debt-laden Monnet Ispat and Energy, submitted by the JSW Steel-AION Investments Pvt II Ltd consortium, making it the third resolution under the Insolvency and Bankruptcy Code (IBC) from the Reserve Bank of India’s (RBI’s) first list of non-performing assets (NPAs). 

The resolution plan was approved by the Committee of Creditors was approved by the NCLT with modifications on Thursday, the company said. It is awaiting the written order of the National Company Law Tribunal (NCLT).

The consortium had offered Rs 28.75 billion to acquire the company. Monnet Ispat and Energy has an outstanding debt of around Rs 114 billion. It owes secured financial creditors around Rs 40 billion, unsecured financial creditors Rs 70 billion and operational creditors Rs 4.4 billion, according to disclosure documents on the firm’s website. After taking into account fresh claims from operational creditors, the bid value was likely to increase by Rs 250 million, sources said. The total bid value, according to the earlier plan, was around Rs 37 billion. The consortium held 75 per cent of the equity of which AION held 70 per cent and JSW 30 per cent.

According to the resolution plan, lenders to Monnet Ispat and Energy were supposed to get an 18 per cent stake in the firm post acquisition. Haircut to lenders on the overall principal loan amount stood at 74 per cent. JSW Steel-AION was the sole bidder for Monnet Ispat’s asset. Once the order was made available, the priority would be to restart the plant, sources added. In the next stage, pending projects would be completed to achieve full capacity of 1.5 million tonnes. According to the original resolution plan, non-core assets were to be transferred to a new company, which was to be divested at a later date. The NCLT Bench had said that mining rights over specific mines under dispute should not be included in the resolution plan.

During a hearing on April 26, the NCLT Bench had rapped the resolution professional for including the mining rights and future revenues in the liquidation value of the firm, despite the fact that the government had cancelled those rights.