Geneva Acquisition Corp (GAC), a blank cheque firm which had announced the acquisition of Indian small-sized steel producer Global High-Tech Industries Ltd (GHIL) in November 2008, is terminating the deal which would have created the first US-listed Indian steel company.

The investment firm which raised $67.4 million through an IPO in February 2007 was to merge GHIL and rename itself as Indian Steel and Metals Corporation.

Blank cheque firms are usually formed to strike one or a few acquisition deals and reverse merge the target firm into themselves thereby becoming an operating company from an investment entity.

Last November GAC had announced that it is acquiring 100% of GHIL through a multi-tiered transaction. It was to initially acquire 51.6% of GHIL at closing, with an option to acquire an additional 15.7% and plans to then acquire the remaining 32.7%. Both of the two subsequent acquisition tranches were to occur within a month of the initial closing.

Founded in 2003 by NP Tekriwal, Ashok Maskara and Rohit Maskara, GHIL started commercial operations in 2005 and became a regional steel producer in Gujarat. It manufactures raw sponge iron, billets and ingots besides finished structural products such as I-beams.

These products are primarily used in infrastructure. It was also believed to be in the process of acquiring iron ore mines in the state of Madhya Pradesh. Its plant located at Bhuj in Gujarat has an annual operating capacity of 105,000 metric tons of sponge iron, 100,800 metric tons of billets, and 96,000 metric tons of rolled structural products.

GAC's president James McGrath said in a statement, "We are disappointed that the current market conditions overshadowed a company with a promising future and with an exceptional management team such that we could not attract the necessary support from investors to execute GHIL's growth plan and merge with GAC."

This is the second blank cheque firm terminating a deal with an Indian firm this month. Earlier, former ICICI Bank chairman N Vaghul backed-Trans-India Acquisition Corp had to call off its acquisition of Hyderabad-based photovoltaic (PV) modules maker Solar Semiconductor as it was unable to get permission from its investors to complete the deal. The deal was announced in October 2008, where Trans-India agreed to acquire a tleast an 80% stake in Solar Semiconductor for $375 million (see our posthere).

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