India Growth Opportunities Fund (IGOF), a scheme of Srei Multiple Asset Investment Trust (SMAIT), has requested debt-laden Odisha Slurry Pipeline Infrastructure’s resolution professional (RP) to consider withdrawing of the company from the corporate insolvency resolution process (CIRP).
IGOF has made such a request to the RP, Ashish Chhawehharia, considering Odisha Slurry Pipeline Infrastructure (OSPIL) would become PAT positive if Essar Steel, now backed by ArcelorMittal, honours its commitments and continues to pay the lease rental to the insolvent company. IGOF owns around 69% equity stake in OSPIL, rest is hold by Essar Steel.
With the Supreme Court clearing the way for the acquisition of Essar Steel in its November 15 order, ArcelorMittal, the world’s largest steelmaker, is currently preparing ground for the takeover of the steel maker for Rs 42,000 crore, under the insolvency resolution process.
“As you are aware, the slurry pipeline is a critical asset for ESIL (Essar Steel India) and it will require unhindered access to the pipeline for its operations in Odisha. Based on the future rentals payable by ESIL under the RTU (Right to Use) Agreement, the entire dues of the lenders can be serviced conveniently as it was envisaged by the lenders at the time of extending debt facility to OSPIL,” India Growth Opportunities Fund wrote in its letter to the RP.
“For the lenders looking for an early exit, it is likely that the exposure can also be refinanced since ESIL backed by ArcelorMittal India Private Limited (AMPIL) is far more creditworthy counterparty and shareholder than erstwhile ESIL,” the letter said. A copy of this letter was also sent to all lenders.
Incidentally, two resolution applicants, ArcelorMittal and Thriveni Earthmovers, have reportedly submitted their resolution plans for OSPIL. Lenders to the OSPIL are State Bank of India, ICICI Bank, HDFC Bank, IDBI Bank, Indian Overseas Bank, Central Bank of India, Canara Bank, Allahabad Bank and Uco Bank, among others. IDBI Bank had taken the company to the National Company Law Tribunal (NCLT) under Section 7 of the Insolvency and Bankruptcy Code (IBC). Total claim admitted by the RP for the company is around Rs 2,600 crore.
Market sources said Odisha Slurry Pipeline Infrastructure is under the CIRP because Essar Steel had not been paying the lease rental as per the agreements. Odisha Slurry Pipeline’s only source of income was the lease rentals.
Source: Financial Express, December 4, 2019