Monnet Ispat and Energy Ltd has agreed to sell its equity stake in Orissa Sponge Iron & Steel Ltd to debt-ridden Bhushan Steel Ltd, according to a stock market disclosure.
It did not share details of the proposed transaction but said: “The discussion is at a preliminary stage and management is looking into the viability/possibility in this regard and proper due diligence is also needed which will take about 45-60 days.”
Monnet Ispat is the single-largest shareholder with 35.17 per cent stake in Orissa Sponge which is currently worth Rs 327 crore. Monnet Ispat's market value is pegged at a mere Rs 194 crore.
Orissa Sponge scrip shot up 20 per cent to close at Rs 387 a share in a weak Mumbai market on Wednesday. Shares of Monnet Ispat closed the day at Rs 29.45, down 2.16 per cent on BSE.
Orissa Sponge is promoted by Mohanty family. Mohantys along with a state government entity together hold 29 per cent stake in the company.
The company was in the middle of a three-way takeover battle a few years ago where Bhushan Steel & Power Ltd (now Bhushan Steel) had sought to take control of the firm. A splinter group of Bhushan Steel, Bhushan Power & Steel, a firm controlled by a former co-promoter of Bhushan Steel & Power, had also thrown its hat into the ring.
Mohantys had brought on board Jajodias of Monnet Ispat as a white knight. Monnet Ispat had manage to garner a large stake though it continued as a public shareholder of the firm.
Debt-laden Bhushan Steel & Power continues to be a large minority stakeholder of Orissa Sponge.