Debt-laden steel company Uttam Galva Steel has four suitors including Edelweiss ARC and AION Capital, its managing director Ankit Miglani told ET.
While the promoter group has also submitted its own restructuring proposal, Miglani said banks were still vetting the proposals on how to bolster the financials of the company carrying debt of about Rs 8,000 crore. He said Uttam Galva Steel was a running plant and what the company needed was some cash flow for the next few years before the steel cycle turned and they were able to stand on their feet.
Reserve Bank has mandated the company to find a resolution before December 13, and the company will have a definitive answer by the end of November.
“We have four proposals on the table including AION Capital and Edelweiss ARC. The decision has to be taken by the banks, and the promoters are cooperating fully,” Miglani said, adding that the banks were also hiring a ratings agency to assess the proposals as per RBI guidelines. However, it is unclear what banks’ response is to the promoters’ restructuring plan.
ET was the first to report in January that AION is in talks with the troubled steelmaker and its lenders to work out a restructuring package which would also entail fresh capital infusion of Rs 500-1,000 crore.
Apart from Edelweiss ARC and AION, Singapore-based private-equity investor SSG Capital Management may also be in the running, one person in the know said. It is also being learnt that banks might go for a change of management outside the strategic-debt restructuring (SDR) route.
“Banks are looking at a change of management since the company is outside the SDR plan. They want the investor to hold 26% equity,” said a person aware of the developments. The company currently has a total debt of around Rs 7,500 crore, including Rs 6,000 crore of bank debt and Rs 1,500 crore of unsecured liabilities.
It was among the 26 names in the second list of defaulters that Reserve Bank of India released in August, giving the companies a deadline of December 13 to resolve debt through any of Reserve Bank schemes, failing which they will be taken to the NCLT by lenders by December 31. The company reported a loss of Rs 445 crore for 2016-17 while losses narrowed in the June quarter of this fiscal to Rs 192 crore, compared with Rs 233 crore in the year-ago period.
Source: Economic Times