JSW Steel and AION Investments Private II will invest Rs 875 crore in Milloret Steel Limited (MSL), a special purpose vehicle owned by the consortium, as part of the resolution plan approved by the National Company Law Tribunal (NCLT) for debt-ridden Monnet Ispat & Energy Limited (MIEL) to fund working capital, capex and payment of financial creditors of the company.
JSW Steel will also provide Rs 125 crore as working capital advance to MIEL under the corporate insolvency resolution process cleared by the latter’s Committee of Creditors.
The consortium has also arranged for a term loan for MIEL to allow payment of amounts due to financial creditors in step with the resolution plan, an official statement issued by JSW Steel on Thursday said.
Earlier this week, the NCLT Mumbai bench had issued an order approving a resolution plan for MIEL submitted by JSW Steel-AION. The plan involves payment of Rs 2,457 crore to secured financial creditors of MIEL, with Rs 215.20 as the amount of admitted debt held by the assenting creditors of MIEL and converted into equity shares of MIEL at face value of Rs 10 per share.
Another Rs 219.92 crore will be payable to assenting financial creditors of MIEL upon conversion of the balance admitted dent into Optionally Convertible Preference Shares (OCPS) of MIEL and purchase of such OCPS by MSL. Additionally, an aggregate amount of Rs 25 crore shall be paid to certain identified operational creditors of MIEL over a period of one year commencing from July 24, 2018 in lieu of admitted debt held by them.
On implementation of the resolution plan, the shareholders of MSL will become the new promoters and acquire control over MIEL under the restructuring proposal laid out in the plan. This involves conversion of part of admitted debt into equity shares of MIEL and after conversion of debt, a reduction in MIEL’s share capital (non-promoter holding) to approximately 33.06% of its original value together with extinguishment of the company’s preference share capital and equity share capital held by the existing promoters of MIEL.
After the merger of MSL with MIEL, MIEL will issue one equity share and one compulsorily convertible preference share (CCPS) of face value Rs 10 each, respectively, for each equity share and CCPS of face value Rs 10 held in MSL.
Accordingly, upon implementation of the resolution plan, consortium members will own 74.29% in equity capital of MIEL. The other shareholders of MIEL, including the financial creditors holding shares, will continue to hold the balance equity of 25.71% of MIEL equity share capital. The consortium will also hold CCPS aggregating to Rs 525.98 crore in.