Stemcor extends time for Indian assets sale by about a month

UK-based metal trading firm Stemcor Holdings has extended the deadline for selling its Indian assets by about a month as the debt-laden company has secured time till February-end from its lenders to "conclude its restructuring discussions".
The unlisted British trading major had failed to repay USD 850 million loans in May, 2013 due to considerable fall in sales. This led to Stemcor initiating the process to sell its Indian assets, which include stakes in two producing iron ore mines and a four million tonne pellet plant.
"The standstill agreement has been extended until the end of February 2014. We continue to make good progress in relation to the sale of our assets in India. It is a confidential process and, as ever, we are not commenting on participants/ timeline etc," a spokesperson for Stemcor said in an e-mail response.

Standstill agreement means that the lenders agree not to demand repayment of the loan for a certain period and allow the company time to devise a restructuring plan.
In India, Stemcor has three key ventures -- Aryan Mining and Trading Corporation (AMTC), Brahmani River Pellets Ltd (BRPL) and Mideast Integrated Steel Ltd (MISL). All the three ventures are located in Odisha only and the British trading major has invested about Rs 2,000 crore on them.
Industry sources said that following extension of the standstill agreement, Stemcor extended the bidding deadline for its Indian assets by 15 to 30 days as some of the bidders wanted to gauge the mood of governments at the Centre and Odisha on Justice M B Shah Commission's report.

Sources said that uncertainty is looming large on Odisha following the Commission's explosive report becoming public and imposition of a mining ban cannot be ruled out in the state given the past experiences of Karnataka and Goa -- the two other major domestic iron ore producing states.

In this scenario, bidders are waiting for action to be taken by the government before placing their bids, they said.
The Indian assets of Stemcor, considered very attractive on account of producing mines and proximity to some of the steel mills, were valued at about USD 800 million by the industry players and bids could be higher, if regulatory uncertainty is resolved, the sources said.

Some leading Indian firms, including JSW Steel and Jindal Steel and Power, Aditya Birla group's Essel Mining and Industries, Vedanta's Sesa Sterlite, Tata Steel are in the fray. Some global majors, like Glencore and Noble group, are also said to be in the race.
The asset sale would lead to Stemcor paring a big chunk of its USD 1.25 billion debt. Goldman Sachs is advising the company on the asset sale.
The Shah Commission, in its report on illegal mining in Odisha, has recommended to recover over Rs 59,203 crore from the miners for excess production of iron and manganese ores and has said that Odisha government machinery "collapsed and looked ineffective and helpless" before the mining mafia.