Debt-laden Jindal Stainless will hold meetings on May 16 with shareholders and creditors to discuss the business rejig plan as part of efforts to pare debt and boost profitability.
After nod to the composite scheme of arrangement amongst Jindal Stainless and its three wholly-owned subsidiaries, the meeting is being convened following directions from the High Court of Punjab and Haryana.
The Court has asked the stainless steel maker to convene "meetings of equity shareholders, secured creditors and unsecured creditors" for considering the composite scheme of arrangement among the four companies, according to a filing to the BSE.
On April 13, the company, through postal ballot, had sought the approval of public shareholders on the composite scheme of arrangement between Jindal Stainless, Jindal Stainless (Hisar), Jindal United Steel and Jindal Coke and their respective shareholders and creditors.
The domestic stainless steelmaker had last month received stock exchanges' nod for the proposed demerger, a move aimed at boosting profitability and paring debt.
At present, the steel maker's debt stands at about Rs 8,500 crore, as per a company source, who said that this will come down by Rs 5,000 crore post-restructuring.
According to the sources, this Rs 5,000 crore debt will be borne by the three companies which will help Jindal Stainless to complete the Corporate Debt Restructuring (CDR) programme, which has been underway since 2012.
In December, the company's board had approved the plan.
Under the scheme, Jindal Stainless proposes to demerge its ferro alloys and mining divisions and vest them with Jindal Stainless (Hisar).
It will also transfer stainless steel making facilities in Hisar to Jindal Stainless (Hisar) for a lump sum consideration of over Rs 2,809 crore.
Jindal Stainless will transfer the hot strip plant located in Odisha to Jindal United Steel by way of slump sale for Rs 2,412.67 crore, the company had earlier said.
The company also had proposed to transfer its coke oven plant in Odisha to Jindal Coke by way of a slump sale for Rs 492.64 crore.
Once the rejig scheme becomes effective, Jindal Stainless (Hisar) would seek listing of its equity shares on both the exchanges and its global depository receipts (GDR) at the Luxembourg Stock Exchange.
As part of the scheme, the shareholders of the company would be issued shares by Jindal Stainless (Hisar) as per the share entitlement ratio of 1:1.
Apart from aiming at unlocking value for shareholders, increasing profitability, reduction of the debt and improvement of the serviceability of the debt, the rejig plan also aims to increase capacity utilisation, enable the backward integration, ensure long-term stability and focused management of different business verticals.
