Business Standard

NCLT approves Vedanta's resolution plan for Electrosteel

IANS  |  Kolkata 

Tribunal's (NCLT) bench on Monday approved Vedanta Ltd's resolution plan for the insolvent Electrosteel Steels Ltd, one of the 12 large corporate defaulters identified by the

During the proceedings, the debt-laden company's resolution professional, Dhaivat Anjaria, had submitted Vedanta's resolution plan before the bench for final disposal after lenders declared it as "successful resolution applicant".

"The approved (by Committee of Creditors) resolution plan shall come into force with immediate effect," the order said.

Vedanta informed stock exchanges that it was declared "successful resolution applicant" under the Corporate Resolution Process of the and Bankruptcy Code, 2016 and had received the Letter of Intent. The company also said it had accepted the terms outlined in it.

"Pursuant to the resolution plan, a wholly-owned subsidiary of the Vedanta, will subscribe for the share capital of Electrosteel for an aggregate amount of Rs 1,805 crore ($ 275.7 million) and provide additional funds aggregating of Rs 3,515 crore ($ 536.9 million) by way of debt," the company said in a statement on Tuesday.

Upon implementation of the resolution plan, the company will hold approximately 90 per cent of the paid up share capital of the The remaining 10 per cent will be held by Electrosteel's existing shareholders and the financial creditors who receive shares in exchange for the debt owed to them, it added.

During the insolvency proceedings, Vedanta's had informed that the Anil Agarwal-promoted company have made an offer of Rs 5,320 crore for the firm, while the liquidation value stands at Rs 2,899 crore.

"The funds received by as debt and equity will be used to fully settle the debts owed to the existing financial creditors of , by payment of Rs 5,320 crore (US$ 812.6 million)," it said.

The company was referred to the bankruptcy court by the after the had on June 13 asked banks to refer a dozen troubled companies to the NCLT.

The resolution professional had received bids from Vedanta Ltd, Edelweiss Alternative Asset Advisors, and in January this year for the Vedanta emerged as the H-1 bidder, followed by was the third highest bidder.

According to the order, the total admitted financial debt of the corporate debtor, Electrosteel Steels Ltd, was Rs 13,395 crore.

However, Kolkata-based steel maker owns and operates a greenfield integrated near Bokaro, Jharkhand, India, which has a current capacity of 1.5 million tonnes per annum (mtpa) and the potential to increase to 2.5 mtpa.

Renaissance Steel, one of resolution applicant, had alleged that its two rival bidders, and Tata Steel, were not eligible to bid for the as per the Section 29A of the (IBC).

The bench of the NCLT on March 20, had directed the resolution professional (RP) of the debt-laden company to place all the objections of against the eligibility of Vedanta and to bid for the insolvent company before the for an "independent consideration" of the committee.

Vedanta's plan was, however, approved by the by 100 per cent voting shares of the committee.

The court, in fact, dismissed the objection raised by the Renaissance Steel.

The directors of the Vedanta believe that the transaction will complement the group's existing iron ore business as the vertical integration of has the potential to generate significant efficiencies.

Its directors do not expect the transaction will have any material impact on the Group's earnings for the financial year ending March 31, 2019 and anticipate returns to be received in the following years.



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First Published: Tue, April 17 2018. 22:06 IST