ElectrosteelNSE 16.81 % Steels has become the first of the ‘Dirty Dozen’ to be resolved under the Insolvency and Bankruptcy Code with the National Company Law Tribunal (NCLT) approving the resolution plan submitted by Resources conglomerate VedantaNSE -0.52 %, ET Now reported.
Anil Agarwal, chairman of the Vedanta Group told BloombergQuint that the Vedanta Group would look to complete the process of taking over Electrosteel Steels very shortly. He said that the group would make all efforts to turn the stressed asset around.
On March 30, the Committee of Creditors to the debt-laden Electrosteel Steels had chosen Vedanta as the highest bidder for the company, backing the earlier decision of the resolution professional.
The CoC, led by the State Bank of India, rejected the contentions of Renaissance Steel India that had questioned the eligibility of Vedanta and Tata Steel as bidders for Electrosteel in the dedicated bankruptcy process.
“It was there in the pipeline but when I spoke to people in Delhi, the bankers, everybody urged us to bid. This is Vedanta’s cup of tea,” Agarwal had told ET two weeks ago in an interview. According to an ET report, the Vedanta bid was said to be worth about Rs 4,500 crore, although one person said it might include an additional “sweetener”. The Tata bid was said to be worth about Rs 3,500 crore.
Electrosteel faces claims of around Rs 10,000 crore from financial creditors, rising to Rs 13,000 crore if interest and penalties are added. If these are excluded, Vedanta’s offer implies a haircut of 55% for lenders. A haircut is the amount a lender has to forgo to settle a loan. SBI was the lead bank and had referred Electrosteel to NCLT in July last year at the direction of the Reserve Bank of India.