The dedicated bankruptcy court has approved a revival plan submitted by Orissa Metaliks Pvt Ltd (OMPL) for the integrated steel manufacturer MSP Metallics Ltd.
Kolkata-based OMPL is paying about Rs 800 crore, whereas the admitted liabilities of the company amount to more than Rs 2,735 crore. The lenders have approved the plan with 100% voting.
In 2020, the state-owned Central Bank of India had approached the Kolkata bench of the National Company Law Tribunal after MSP Metallics failed to repay its dues. However, in April last year, the company’s lead lender, State Bank of India(SBI), on behalf of the consortium, assigned the debt of the Jharsuguda-based 250,000 tonnes per annum steel plant to CFM Asset Reconstruction Pvt Ltd.
“As per the CoC (committee of creditors), the plan meets the requirement of being viable and feasible for the revival of the corporate debtor (MSP Metallics),” the bench, presided by members Rohit Kapoor and Harish Chander Suri, said in a 32-page order on July 11.
“As far as the question of granting time to comply with the statutory obligations/seeking sanctions from governmental authorities is concerned, the resolution applicant (OMPL) is directed to do the same within one year,” said the tribunal.
It said that the successful resolution plan proposes a financial outlay of Rs. 800.02 crore, which is way higher than the company’s average fair market value of Rs 495 crore and liquidation value of Rs 347 crore.
The company owed more than Rs 1,500 crore to its financial lenders. SBI holds 37.2% voting rights in the CoC, while lenders include Indian Bank, Punjab National Bank, UCO Bank, Indian Overseas Bank, Canara Bank, Central Bank of India, Union Bank of India, Bank of Baroda and Bank of India.
As per the MSP Metallics website, the company has signed a memorandum of understanding (MoU) with the Odisha government and it has been granted a coal linkage for its steel plant. The company, incorporated in 1997, claims that its plant is spread over 370 acres and closer to large deposits of iron ore, coal and limestone in the metallurgical belt of Odisha.
Currently, OMPL, promoted by Sajjan Kumar Patwari, owns two manufacturing plants located at Kharagpur and Jhargram in West Bengal. With the acquisition of MSP Metallics, the company will also have a presence in neighbouring Odisha.
The development comes about three months after investment firm Nithia Capital acquired Crest Steel & Power through the bankruptcy process for a total consideration of Rs 600 crore. Crest Steel & Power was under the corporate insolvency resolution process since August 2018. In 2020, its admitted financial liability was about Rs 3,118 crore.
