Details Of JSW-Aion’s Resolution Plan For Monnet Ispat 

The resolution plan for Monnet Ispat Ltd., proposed by joint bidders JSW Steel Ltd. and Aion Capital Partners Ltd., is said to have been accepted by the Committee of Creditors, two people aware of the development told BloombergQuint on the condition of anonymity.

Aion Capital, a fund that specialises in distressed asset buyouts, is the lead partner with 69 percent shareholding in the consortium. Monnet Ispat is one of the 12 companies that were directed by the Reserve Bank of India for resolution under the Insolvency and Bankruptcy Code in June last year.

The joint bid, the only one received, has proposed to infuse Rs 3,700 crore in the company. The company’s liquidation value has been pegged at Rs 2,365 crore.

Of the Rs 3,700 crore, the proposal is to pay Rs 2,650 crore to the financial creditors against their admitted claims of Rs 10,237 crore. This amounts to a 76 percent haircut for the financial lenders. The remaining Rs 1,055 crore will be allocated towards capital expenditure, working capital and transaction-related expenses. Operational creditors will receive nothing against their claims of Rs 443.38 crore, according to a copy of the resolution plan presentation seen by BloombergQuint.

Here's how JSW-Aion intend to source this Rs 3,700 crore:

• Loans from banks: Rs 2,500 crore
• Working capital advance by JSW Steel: Rs 125 crore
• Funds by bidders in the form of equity/quasi equity: Rs 875 crore
• Funds by bidders as additional debt/equity at a later stage: Rs 200 crore

The equity and quasi equity amount of Rs 875 crore includes Rs 398 crore as equity, Rs 277 crore via compulsorily convertible preference shares and Rs 200 crore in the form of quasi-equity to acquire optionally convertible preference shares.

Post the implementation of the resolution plan, JSW-Aion will hold 75 percent stake in the company. Lenders will hold 18.75 percent and the incumbent promoter group, 3.16 percent. Currently, the promoter group holds 25.27 percent and financial institutions hold a 50.10 percent stake. The rest is with other public shareholders.

JSW-Aion’s resolution plan also proposes transfer of Monnet Ispat’s non-core assets into a new company to be sold later. Some of the assets like the company’s Raipur unit, Hahahaddhi iron ore mine, investment in Orissa Sponge Iron & Steel Ltd., corporate office, coal washery at Patherdih and Angul along with non-current investments are among those assets that may be divested to a new company, which will be sold at fair market value at a later stage. The Gaitra and Guma-Pausari limestone mine is proposed to be continued for the benefit of JSW-Aion.

While the Committee of Creditors has accepted the proposal, lawyers are expected to vet it in the next two weeks, post which the committee will approve it, people mentioned above said. The plan will then be submitted to the National Company Law Tribunal for approval. BloombergQuint’s email seeking comments from JSW Steel, Aion Capital, SBI and the resolution professional remain unanswered.