Monnet may accept resolution plans even after deadline

In February, Sajjan Jindal-controlled JSW Steel had emerged the sole bidder for a controlling stake in Monnet Ispat & Energy through the strategic debt restructuring (SDR) route. On Tuesday, when the bids closed at 6pm for resolution plans for Monnet, which is going through the Reserve Bank of India (RBI)-mandated insolvency process, the only bid came from the JSW-AION combine. The only difference between then and now is that the present offer includes an upfront cash component.

Asked whether JSW-AION was the only bidder for Monnet at this point, Sumit Binani, resolution professional for the company, said the first right to this knowledge was with the committee of creditors. Binani is supported by Grant Thornton. The committee of creditors is expected to meet soon to take up the proposal.

The Monnet stock on Wednesday appreciated 2.10 per cent and closed at Rs 34 on the BSE. Sources close to the development said the maximum weightage in the Monnet evaluation criteria was for the upfront payment. Monnet also happened to be one of the few cases that had made the evaluation criteria known to prospective bidders well ahead of submission of resolution plans.

The modalities of JSW-AION are yet to be worked out, but JSW will be running the plant if its plan finally gets approved. It could also hold majority in the special purpose vehicle. 

Sources said that even though the date for accepting resolution plans has passed, these could be accepted by the resolution professionals till the last date and placed before the committee of creditors for consideration. The last date for Monnet would be January 13 unless it seeks an extension.

According to the Insolvency and Bankruptcy Code (IBC) rules, the committee of creditors would have to finalise a resolution plan for the company within 180 days, with provision for an extension for another 90 days. Monnet’s 180 days would be completed on January 13 and 270 days on April 4.

The last offer that JSW Steel had made for Monnet was to take over debt of around Rs 2,222 crore. Monnet’s debt in FY16 stood at Rs 8,900 crore. Lenders had refused to take a call on the proposal as they found the haircut too steep.

Sources indicated that Monnet’s liquidation value before the bidding process started was calculated and amounted to around Rs 2,300 crore. If JSW’s offer was below Rs 2,300 crore then the committee of creditors might be in a fix. But given that JSW’s last offer was Rs 2,222 crore, it was likely to up it since it was going through a bidding process.

It now remains to be seen whether any other bidder submits a business plan. 

A number of firms including Tata Steel and a clutch of private equity firms like SSG, TPG had submitted expression of interest.  

At a Glance

• August 2015: Lenders invoke SDR in Monnet
• February 2017: JSW emerges as sole bidder for Monnet
• July 2017: NCLT admits Monnet case
• September 25, 2017: Prospective bidders submit EOIs
• December 12, 2017: Deadline for submission of resolution plans