According to recent news reports, Monnet Ispat creditors approved JSW’s offer for Rs 3,700 crore ($568 million). It is one of the 12 defaulting companies referred by the Reserve Bank of India for insolvency in 2017. The offer includes a payment of Rs 2,450 crore ($376 million) to the lenders, Rs 1,050 crore ($161 million) in equity funding, and Rs 200 ($31 million) crore for remaining debt. The offer was made by a consortium of Aion Capital and JSW Steel.
Monnet Ispat is considered debt-ridden with Rs 10,359 crore ($1.6 billion) from financial creditors and Rs 116 crore ($18 million) from operational creditors. Aion Capital, a joint venture between ICICI Venture and Apollo Global Management, holds a 70 percent stake in the consortium and JSW Steel has the remaining 30 percent.
The consortium will hold 75 percent in the company while 18 percent will be held by lenders and 3 percent by the existing owners. The existing shareholders of Monnet Ispat, including founder Sandeep Jajodia and his family, currently hold a 25.27 percent stake in the company while financial institutions and banks hold 47 percent.
It is understood that JSW will maintain Monnet as a separate legal entity initially, but may merge it in the future. Monnet Ispat owns a 1.5 million mt integrated steel plant along with an 800,000 mt sponge iron plant, a 2 million mt pellet plant, a 960,000 mt sinter plant and a 230 MW captive power plant in Chhattisgarh. The company also has 7.5 million mt of coal beneficiation facilities in Chhattisgarh and Odisha.
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