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AION-JSW gets Monnet Ispat creditors’ final nod for acquisition
Photo Credit: Reuters

Debt-laden Monnet Ispat and Energy Ltd said on Tuesday that its committee of creditors has given the final approval for its acquisition by a consortium comprising of distressed assets player AION Capital Partners Ltd and steelmaker JSW Steel Ltd.

The company, which produces sponge iron, steel, and ferro alloys, said in a stock exchange filing that the final voting for the debt resolution plan took place on Monday, with 98.97% of creditors voting in favour of it.

The green light from the committee, which consists of 39 lenders, marks the conclusion of one of the country's largest insolvency proceedings.

Monnet Ispat owes lenders more than Rs 10,000 crore and the Committee of Creditors had likely agreed to take a 70% haircut on the loans.

The proceedings had come to a halt last week when lenders including ICICI Bank, Standard Chartered Bank and Industrial Finance Corporation of India separately approached the Mumbai bench of the National Company Law Tribunal (NCLT). The lenders wanted their additional claims to be put before the committee of creditors.

The tribunal then instructed resolution professional (RP) Sumit Binani to include these claims, totalling more than Rs 790 crore, in proceedings.

NCLT had initiated insolvency resolution proceedings against Monnet Ispat under the Insolvency and Bankruptcy Code in July last year after the country's central bank identified the firm among its first list of a dozen large defaulters to be sent for debt resolution.

A consortium of AION Investments Private II Ltd and Sajjan Jindal-led JSW Steel had in December submitted a Rs 3,500 crore ($538.3 million) resolution plan for Monnet Ispat. The plan was revised on March 1 this year under the Insolvency and Bankruptcy Code. After this resolution plan was approved by the creditors, AION Capital and JSW Steel had sought the approval of the Competition Commission of India (CCI), which gave its nod on March 12.

AION Capital is a joint private equity fund sponsored and run by Apollo Global Management India and ICICI Venture. It holds a 70% stake in the consortium while JSW Steel holds the remaining.

The consortium has proposed to acquire 75% of the equity shareholding and management control of Monnet Ispat.

Monnet Ispat’s shares rose as much as 9% in afternoon trading on Tuesday.

Incorporated in 1990, Monnet Ispat operates two iron and steel manufacturing facilities in Raipur and Raigarh.

Lenders of Monnet Ispat had in August 2015 invoked the Strategic Debt Restructuring (SDR) scheme after company defaulted on loan repayments.

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