Prithvi Raj Jindal’s holding company, Siddeshwari Tradex, raised a Rs 500 crore debt facility from an Edelweiss-promoted finance company and an Edelweiss-managed fund to finance the acquisition of bankrupt Sathavahana Ispat, people familiar with the development said.
PR Jindal’s flagship company, Jindal Saw, is expected to emerge as the highest bidder, said the people. The company has received a Rs 266 crore repair and maintenance contract for Sathavahana Ispat recently from the resolution professional also signals this, they said.
Jindal Saw is one of the seven applicants to have submitted an expression of interest under the corporate resolution process for the distressed steel company. The other EoI applicants are Vedanta Ltd, Welspun Corp Ltd, Sarda Mines Ltd, Ares SSG Capital (Singapore) Ltd, Khandwala Finstock Pvt Ltd and Trimex Industries Pvt Ltd, according to the disclosures made by the RP on the company’s website.
The resolution plan by the PR Jindal group company is expected to be around Rs 550 crore, one of the persons said.
Sathavahana Ispat’s committee of creditors (CoC) comprises only one creditor — J. C. Flowers Asset Reconstruction Company that had acquired the company’s loans from the steel company’s lenders in June. On October 19, the CoC awarded the Rs 266 crore contract for repair and maintenance of the steel company’s manufacturing facilities to Jindal Saw, according to the disclosures made to stock exchanges.
J. C. Flowers ARC purchase of the bank loans was funded partly by PR Jindal group’s holding company, people cited above said. Siddeshwari Tradex had invested Rs 69.65 crore in secured non-convertible bonds issued by J. C. Flowers ARC in the last week of June, according to a document seen by ET.
Siddeshwari Tradex availed of Rs 500 crore from Edelweiss Special Opportunities Fund (series III) and ECL Finance by issuing secured, unlisted NCDs at an internal rate of return of 25% for five years, the people said. The NCDs have exclusive pledges of securities by its shares in JSW Energy, JSW Steel, Jindal Power & Steel and Jindal Holdings, according to stock exchange disclosures.
J.C. Flowers ARC and Jindal Saw did not respond to requests for comments.
Sathavahana Ispat, admitted by the Hyderabad bench of the National Company Law Tribunal in July this year, has a Rs 1,747 crore financial creditor claim, according to the disclosures published on the company’s website. In June, all lenders including Canara Bank, Union Bank of India, State Bank of India and IFCI, had sold their debt to J. C. Flowers ARC for Rs 531 crore, the people said.
PwC-backed resolution professional Bhuvan Madan has invited firm resolution plans for the bankrupt steel company by December 5 and plans to submit those to the adjudicating authority by December 21, as per the disclosures made to the Insolvency and Bankruptcy Board of India.
In May, the Canara Bank-led consortium of lenders to the company had received the highest offer of Rs 410 crore for their loans from J.C. Flowers ARC, which triggered a Swiss auction. On June 21, at the Swiss auction, Pridhvi Asset Reconstruction & Securitisation (Paras) Ltd, in partnership with Megha Engineering, gave a counteroffer of Rs 531 crore. This offer was matched by JC Flowers ARC the next day.
Sathavahana Ispat has a 50-megawatt captive power plant, and one plant each in Andhra Pradesh and Karnataka producing pig iron and ductile iron pipe.
