JSW Steel gets NCLT approval for resolution plan for Monnet Ispat & Energy

JSW Steel announced that the National Company Law Tribunal, Mumbai Bench, on 25 July 2018 has approved the resolution plan submitted by the consortium of JSW Steel and AION Investments Private II Limited (a wholly owned subsidiary of AION Capital Partners) as approved by the committee of creditors of Monnet Ispat & Energy (MIEL) in the corporate insolvency resolution process of MIEL.

Pursuant to the Resolution Plan, the settlement of the claims of the financial creditors of MIEL shall take place as follows:

Payment to secured financial creditors of MIEL - Rs 2457 crore
Amount of admitted debt held by the assenting financial creditors of MIEL and converted into equity shares of MIEL at face value of Rs 10/- per share - Rs 215.20 crore.

Amount payable to the assenting financial creditors of MIEL upon conversion of their balance admitted debt into Optionally Convertible Preference Shares (OCPS) of MIEL and purchase of such OCPS by Milloret Steel (MSL) - Rs 219.92 crore.

In addition, an aggregate amount of Rs. 25 crore shall be paid, to certain identified operational creditors of MIEL over a period of 1 (one) year commencing from 24 July 2018, in lieu of the admitted debt held by such operational creditors of MIEL in the manner directed by the Hon'ble NCLT.

Pursuant to the Resolution Plan, the Consortium will infuse Rs. 875 crore in MSL (a special purpose vehicle directly/indirectly owned by members of the Consortium) in the manner set out in the Resolution Plan to fund the working capital, capital expenditure requirement of MIEL and towards payment to financial creditors including purchase of the OCPS from the financial creditors (as set out above). In addition, JSW Steel will provide Rs. 125 core as a working capital advance to MIEL. The Consortium has also arranged a term loan for MIEL to enable payment of the amounts due to the financial creditors in accordance with the Resolution Plan and as mentioned above.

Upon implementation of the Resolution Plan, the shareholders of MSL will become the new promoters and acquire control over MIEL pursuant to the restructuring proposal proposed in the Resolution Plan which involves (i) conversion of part of the admitted debt into equity shares of MIEL as set out above; (ii) after such conversion of debt, a reduction of MIEL's share capital (non-promoter holding) to approximately 33.06% of its original value together with extinguishment of the Company's preference share capital and the equity share capital held by the existing promoters of MIEL, however, as directed by the NCLT, no retail shareholder of MIEL as on date of the order of NCLT shall be eliminated pursuant to such capital reduction and subsequent consolidation; and (iii) after such capital reduction, a merger of MSL with and into MIEL.

Pursuant to the merger of MSL into MIEL, MIEL will issue 1 equity share and 1 compulsorily convertible preference share (CCPS) of face value of Rs. 10 each respectively for every one equity share and CCPS of face value of Rs.10 held in MSL.

Accordingly, immediately upon implementation of the Resolution Plan, the Consortium members will directly or indirectly hold equity shares amounting to approximately 74.29% of the paid-up equity share capital of MIEL. The other shareholders of MIEL including the financial creditors holding shares will continue holding the balance equity amounting to approximately 25.71 % of MIEL's paid-up equity share capital. The Consortium will also hold CCPSs aggregating to Rs 525.98 crore in MIEL.

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