“Vedanta Ltd (the company) has today received the approval from the Competition Commission of India (CCI) for the application made by it for the acquisition of Electrosteel Steels Ltd.,” the Indian unit of diversified mining group Vedanta Resources plc said in a filing to BSE.
The National Company Law Tribunal had last month approved the resolution plan submitted by Vedanta for Electrosteel Steels, making it the first among 12 large stressed accounts identified by the Reserve Bank of India last year to get resolved under the Insolvency and Bankruptcy Code.
The NCLT in ITS order had said that the “resolution plan of corporate debtor Electrosteel Steels Ltd. which is approved by the CoC with a voting share of 100 percent under Section 31 (1) of the Insolvency & Bankruptcy Code 2016” has been approved.
The resolution plan involved close to Rs 5,300 crore cash payout and a haircut of 60 percent of the total bank debt. Electrosteel Steels owes lenders more than Rs 13,000 crore, of which about Rs 5,000 crore is to State Bank of India alone.
Vedanta in a statement had said that “one of its wholly owned subsidiaries will subscribe to the share capital of Electrosteel for an aggregate amount of Rs 1,805 crore ($ 275.7 million) and provide additional funds aggregating to Rs 3,515 crore ($536.9 million) by way of debt”.
“Upon implementation of the resolution plan, the company will hold approximately 90 percent of the paid up share capital of Electrosteel,” it had said. The remaining 10 percent stake will be held by Electrosteel’s existing shareholders and financial creditors, it had added.
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“The funds received by Electrosteel as debt and equity will be used to fully settle the debts owed to the existing financial creditors of Electrosteel, by payment of Rs 5,320 crore ($812.6 million),” the company had said.
Vedanta had earlier said Electrosteel Steels’ assets in Jharkhand will help the group in value addition from one of Vedanta's iron-ore mines in the region.
Electrosteel operates an integrated steel manufacturing facility near Bokaro, Jharkhand which has a capacity of 1.5 million tonnes per annum.