The National Company Law Appellate Tribunal (NCLAT) on Wednesday permitted Vedanta, promoted by Anil Agarwal, to make an upfront payment of Rs 5,320 crore to lenders for its proposed acquisition of Electrosteel Steels. Any resolution of Electrosteel Steels, will, however, be subject to the NCLAT’s final order in the case where Renaissance Steel India (RSIPL)— another bidder for Electrosteel — has challenged Vedanta’s bid. The NCLAT added Electrosteel’s lenders would refund the money to Vedanta if the final order goes against it. The NCLAT had, on May 17, admitted RSIPL’s petition challenging Vedanta’s eligibility.
Renaissance Steel had earlier said that one of Vedanta’s affiliates in Zambia — a unit of its UK-based parent Vedanta Resources — had been found guilty of criminal misconduct punishable with two or more years in jail. This could be the second instance, after Tata Steel’s acquisition of Bhushan Steel, where lenders will be able to recover their loans from a large defaulter using the Insolvency and Bankruptcy Code (IBC).
“During the pendency, the parties may act as far the approved resolution plan and the resolution applicant may deposit the upfront amount to Committee of Creditors (CoC) subject to the order of the appeal,” the NCLAT bench headed by chairman Justice SJ Mukhopadhaya said. Earlier this month, the NCLAT bench had ordered a status quo in the resolution process of Electrosteel after hearing a plea by Renaissance Steel, which challenged a National Company Law Tribunal (NCLT) order on April 17 that approved Vedanta’s bid. While the appellate tribunal had not considered Vedanta’s appeal, it agreed to hear the matter on a daily basis.
On Monday, Anil Agarwal-led Vedanta had requested the NCLAT to vacate its May 1 order that said status quo be maintained till further orders. Senior advocate CA Sundaram, appearing on behalf of Vedanta, had said that the status quo was costing around Rs 1.9 crore daily to the lenders involved. He also said that the stay order was causing a delay in obtaining various clearances required to complete the acquisition.
Vedanta’s counsel had said that the company has offered to pay Rs 5,320 crore upfront to the lenders of the bankrupt steelmaker. In addition, it would offer financial creditors 7.5% equity in lieu of their debt, taking the total offer to Rs 6,148 crore. RSIPL had offered Rs 3,000 crore as an upfront payment and another Rs 4,404 crore payment at the end of the fifth year. Electrosteel, one of the 12 large defaulters seeking resolution through the IBC, owes Rs 13,000 crore to lenders, led by State Bank of India.