Ernst To Spot Ally For Merged Unit Of Lloyds Steel

MUMBAI

Financial institutions (FIs) led by ICICI has appointed international consultants Ernst & Young to find a strategic partner for the merged entity of Lloyds Steel Industries and Lloyds Metals & Engineers after the demerger of the engineering and cold-rolled sheets business from the latter.

The FIs have mandated Ernst & Young to sell 50% stake in the merged entity. Under the plan, Lloyds Metals' engineering and cold-rolled sheets divisions are being hived off into Encon Technologies, while it will retain the sponge iron business.

As per the understanding reached between the Lloyds promoters and institutions, with the induction of a strategic partner in the new company, present chairman Mukesh Gupta will step down. He will be replaced an independent chairman, to be nominated by FIs, but with the approval of the present promoters. Earlier, the institutions, while convert the majority of existing loans into equity. ICICI is the lead institutions for the group.

While institutions will hold around 51 per cent equity, the stake of Lloyds group promoters will come down to 13 per cent with the remaining deing held by the public.