Anil Agarwal-led Vedanta Limited has finally made a foray into steel-making by paying ₹ 5,320 crore to buy out Electrosteel Steels under the Insolvency and Bankruptcy Code (IBC), making it the second successful resolution under the new IBC law.
Last month, Tata Steel bought Bhushan Steels for ₹ 36,400 crore, making it the first breakthrough in resolving legacy issues of banks under IBC from first 'dirty dozen' list issued by the RBI.
“Pursuant to the order dated May 30, 2018 of National Company Law Appellate Tribunal (NCLAT), Vedanta Limited is implementing the approved resolution plan for Electrosteel Steels Limited (ESL). Accordingly, Vedanta Star Limited (VSL), a wholly-owned subsidiary of our company, has deposited the upfront amount of ₹ 5,320 crore in escrow account of ESL, and June 4, 2018 has been determined to be the effective date under the resolution plan,” said a company statement.
The company has acquired control over ESL, and a new board of directors has been put in place. Investment from VSL in ESL shall be done through a combination of equity of ₹ 1,765 crore and inter-corporate loan of ₹ 3,555 crore.
Last week, the NCLAT has allowed Vedanta Limited to acquire ESL by depositing the upfront payment to the committee of creditors (CoC). However, payment would be subject to the outcome of the petition filed by Renaissance Steel challenging Vedanta's bid. If, Renaissance Steel wins the case, then the committee of creditors (CoC) will have to return the money to Vedanta, according to the NCLAT order.
Vedanta Limited shares on BSE closed down 0.77% at ₹ 246.3 in a weak Mumbai market on Monday, valuing the company at₹ 91,554.55 crore.