A consortium of Aion Capital Partners and JSW emerged the strongest contender for acquiring Monnet Ispat and Energy Ltd, one of the initial 12 companies shortlisted by the Reserve Bank of India (RBI) for insolvency proceedings.
Tata Steel, Anil Agarwal-led Vedanta Group and Hong Kong-based SSG Capital were among those evaluating the asset but people aware of the matter said it was unlikely they submitted bids, making the Aion-JSW the sole contender.
Aion Capital is a JV between ICICI Venture and Apollo Global Management.
Sajjan Jindal-led JSW Steel has been eyeing distressed assets after successfully turning around Ispat Industries.
Banking sources said the Aion-JSW offer is an all-cash one, making it a compelling proposal for lenders. Aion is the senior partner in the consortium.
The last date for submitting binding bids was Tuesday evening. Monnet will be among the first of the 12 to get to this stage of the insolvency-resolution process, even though the last date has already been postponed twice.
Spokespersons of Aion and JSW declined to comment.
At least 10 companies had submitted initial expressions of interest, said sources in the know. Other than those mentioned above, these were said to include TPG, Blackstone, Edelweiss, Shyam Metalics and a consortium of SSG Capital and Sarda Industries. Promoter Sandeep Jajodia had also shown interest but was barred by the government’s recent ordinance.
Depending on the number of bids, the committee of creditors along with the resolution professional — in this case Sumit Binani supported by Grant Thornton — will select the final contenders based on a set of criteria that include upfront cash recovery for financial creditors, equity stake offered to lenders, fresh equity infusion and experience in turning around stressed assets.
Since its inception in 1994, Monnet has evolved from a sponge iron manufacturer into a diversified steel, power and mining company but its fortunes dipped when the Supreme Court scrapped its coal block allocations in 2014.
Lenders led by the State Bank of India converted a part of the debt into equity and currently control 51% of the company while the promoters hold 25.2%. The Monnet stock ended Tuesday at Rs 33.30, up 3.74%.
The company owes the lenders around Rs 10,300 crore. Its consolidated losses as of March amounted to Rs 2,132 crore on total revenue of Rs 1,375 crore.
Blackstone is an investor in the company but has pared its stake to just 2.28% as of September. Another PE investor CX Partners exited by selling its entire holding at a loss.