The Miglanis, promoters of Uttam Galva, the listed company co-promoted by ArcelorMittal, are close to acquiring Llyods Steel. The target company is under the Board for Industrial and Financial Reconstruction (BIFR) and the banks have been actively scouting for a buyer to recover their money.
A source close to the deal told Business Standard, “The Miglanis are in talks with the banks regarding the buyout. However, the deal is still a few months away.” The official informed that Uttam Galva Steels Deputy Managing Director Ankit Miglani met the bankers today to discuss the deal.
Another source close to the development said the pricing of the asset has not been decided upon as yet. “The banks first need to work on the balance sheet. No company would want to take up the target company’s debt on its books, and normally such deals are concluded without the liabilities. Miglanis, too, do not want to take up ‘Lloyds Steel’s liabilities’.
Lloyds has a 0.6 million tonne per annum (mtpa) iron-making capacity at its Wardha unit in Maharashtra. The company has Rs 800-crore debt on its books, which it failed to service and decided to go under BIFR.
The company reported a net loss of Rs 86.25 crore for the nine months ended December 31, 2010.
The Lloyds Group has two companies under its belt —Lloyds Steel Industries and Lloyds Metals and Engineering Ltd. Llyods Steel Industries, which has the plant in Wardha is the one on the block. The plant is fully integrated with iron ore mines in Garhchiroli, which was allotted to it. Also, the plant is close to the coal mines of Wardha and sources its requirments from the local mines.
As on March 31, the promoters of Lloyds Steel hold 53.09 per cent stake in the company. Domestic institutional Investors hold 11.23 per cent and the public holding is 35.62 per cent.
The Miglanis, in their personal capacity have invested in a completely integrated pig iron unit in Wardha for Rs 2,000 crore. The unit is functional and has a capacity of producing 0.5 million tonnes pig iron per year.
