 "Lenders prepare Monnet Ispat for recovery")
At least five leading companies, including private equity (PE) funds and asset reconstruction companies, have expressed interest in bidding for Monnet Ispat and Energy Ltd, which is undergoing insolvency proceedings.
These companies are Edelweiss Asset Reconstruction Company, Blackstone, TPG, AION Capital (a joint venture of ICICI Venture and Apollo Global Management) together with JSW Steel and Hong Kong-based SSG Capital, which buys distressed assets. The National Company Law Tribunal (NCLT) has also appointed Grant Thornton as the interim resolution professional for this deal.
According to sources in the know, these companies, apart from any other which shows interest, are expected to be called to make firm bids some time in the first week of November.
Insiders point out they are expecting three sets of bidders: One set is PE funds that will bid on their own, another set will have PE funds bidding in partnership with a steel major, and some steel companies could bid on their own.
While Edelweiss, AION and TPG did not comment, e-mails to SSG Capital and Blackstone did not elicit any response. A Grant Thornton spokesperson said that due to a confidentiality clause, it would not be able to comment on the specific case.
Monnet Ispat is just one of the many steel companies in the NCLT facing various stages of insolvency proceedings. The others include Bhushan Steel, Essar Steel and Electrosteel Ltd. The Reserve Bank of India had issued a list of 12 companies that would be referred in the first phase to the NCLT.
Monnet Ispat was sent for insolvency proceedings despite having an offer from Sajjan Jindal’s JSW Steel, which could not submit a bid for the acquisition of the company. The dispute between the lenders centred around what would be the haircut that bankers would have to take for handing over Monnet Ispat to JSW Steel.
Monnet Ispat’s debt had climbed to over Rs 12,000 crore on March 31, 2016, and the company’s debt-to-equity ratio hit 9.26 because the industry went through a slowdown. The company was suffering heavy losses for many years and its net worth had been eroded significantly. Its leading lender, State Bank of India, took the company to the NCLT.
JSW Steel reportedly is also interested in buying out Bhushan Steel. Again, Bhushan Power & Steel is in talks with Piramal-Bain Fund, KKR and JFE Steel Corporation. However, even other steel companies, which include Tata Steel, ArcelorMittal and even Posco, analysts say, may be interested in picking up these steel companies.
PE fund AION, which has experience in turning around steel assets, had earlier closely looked at picking up a stake in another financially stressed steel company headquartered in Mumbai, but it did not pass muster with the lenders.
