UK-based GFG Alliance — owned by India-born British businessman Sanjeev Gupta and his family — on Tuesday announced the strategic acquisition of the debt-laden AdhunikMetaliks and Zion Steel in a Rs 425-crore cash deal under the corporate insolvency resolution process (CIRP). This comes after a prolonged delay by Liberty House, owned by GFG Alliance, in making the payments for taking over the two companies.
The transaction marks GFG Alliance’s entry into India, one of the world’s fastest-growing steel markets, Liberty House said in a statement.
Gupta-led Liberty House had earlier failed to meet several deadlines for the payment under CIRP to acquire steelmaker AdhunikMetaliks, the flagship of Kolkata-based Adhunik Group, and ground company Zion Steel after the Kolkata bench of the National Company Law Tribunal (NCLT) in July 2018 approved its resolution plans for acquiring the two bankrupt companies under the Insolvency and Bankruptcy Code (IBC).
Uncertainty continued over the fate of AdhunikMetaliks and Zion as Liberty House had not paid the required upfront cash payment to the lenders by the stipulated deadline. Following this, the Cuttack bench of NCLT in July 2019 ordered liquidation of the steelmakers after cancelling the resolution plans of the UK-based group.
The National Company Law Appellate Tribunal (NCLAT), however, stayed the liquidation order after Liberty House moved the appellate tribunal against the Cuttack bench’s order.
Giving the last opportunity, NCLAT last month had asked Liberty House to deposit by February 14 a sum of Rs. 380 crore in the account of State Bank of India – the lead bank. NCLAT also asked Liberty to pay costs incurred in the CIRP. Liberty had earlier deposited over Rs. 50 crore as per the approved resolution plans of the two firms.
After the counsel for SBI submitted before NCLAT that the amount in terms of its order had been paid and the counsel appearing on behalf of CoC also accepted that, the appellate tribunal, in its order dated February 17, said, “In view of the development, the order of liquidation is stayed and the liquidator will function as resolution professional.”
“…We allow the resolution professional/liquidator to hand over the records, control etc. to the appellant (successful resolution applicant — Liberty House Group). Parties will also ensure to implement the plan in its letter and spirit,” it added.
In a statement GFG Alliance said it would introduce its GREENSTEEL model — combining steel recycling with low carbon and renewable power sources — to revive the steel plants. “The immediate focus will be on reviving and restoring the facilities and operations, and once stabilized. The business will begin its integration into Liberty Steel Group,” the statement added.
Commenting on the acquisition, GFG Alliance executive chairman Gupta said: “It has been a challenging journey to get us to this stage, but we now look forward to starting work in partnership with all stakeholders to revive these plants and bring employment back.”
AdhunikMetaliks has an integrated steel plant located near Rourkela in Odisha. The plant has both blast furnace and electric arc furnace steel-making capability with 0.5 million ton per annum, and a 34 MW captive power plant. Zion has its associated steel-rolling facility.
SOURCE: Financial Express, February 19, 2020