Insolvency process: Edelweiss joins race for Monnet Ispat

Lenders unhappy with single offer seeking 72% haircut

Edelweiss Asset Reconstruction Company has joined the race to buy Monnet Ispat & Energy’s assets after JSW Steel presented a resolution plan asking lenders to take a 72 per cent haircut on the company’s Rs 8,900-crore debt. Till now, JSW Steel was the only company to have submitted a resolution plan.

According to a source close to the development, Edelweiss has already submitted its expression of interest and would be presenting a resolution plan in the coming days. The last date for Monnet Ispat will be extended as lenders are not happy with JSW Steel’s offer. Monnet Ispat plans to file an application for a 90-day extension before the National Company Law Tribunal. Monnet Ispat’s 180 days would be completed on January 13 and 270 days on April 4. The delay is good for JSW Steel, which has sought clarity on the income-tax to be levied on the haircut taken by the bank and interest foregone by them. The coming Budget is expected to clarify on this aspect.

According to the information memorandum circulated to potential bidders by the resolution professional, the liquidation value of Monnet Ispat is Rs 2,385 crore. The one-time settlement amount proposed by JSW-AION Capital was Rs 2,470 crore. Currently, the committee of creditors is discussing the resolution plan put forward by JSW-AION, which also includes an equity infusion into the company.

The resolution professional can accept resolution plans even after the deadline and place it before the committee of creditors for consideration. Sumit Binani, resolution professional for Monnet Ispat, supported by Grant Thornton, declined to comment. 

Many companies, including Tata Steel and private equity players, had evinced interest in Monnet Ispat but, ultimately, JSW-AION submitted the bid. Sources said the committee of creditors was evaluating the JSW-AION bid. It is possible for any entity to enter the fray even now, they said. Monnet Ispat is one the 12 companies that was identified by the Reserve Bank of India for action under the Insolvency and Bankruptcy Code (IBC). The RBI later identified another 28 companies for resolution under the IBC.


 

This is the third time that Monnet Ispat has been put on the block; twice through the strategic debt restructuring (SDR) route and currently under the IBC. In the last SDR round, JSW Steel had emerged as the sole bidder, but lenders had found the haircut too steep. The bid entailed a debt takeover of around Rs 2,222 crore under the previous scheme. 

The lenders are taking a massive haircut on their debt as evident from the latest resolutions. In the case of Murli Industries, which had a 3 mtpa cement plan, the lenders took a massive haircut of 80 per cent as its new owner Dalmia Bharat offered Rs 400 crore to banks. 

Earlier, in the much smaller Synergies Dooray settlement, banks agreed to take a 96 per cent haircut and handed over the company back to its promoter. Monnet Ispat’s stock closed at Rs 33 on Thursday, up over 9.5 per cent over Wednesday’s close.