Seven months after court approval, UK-based distressed steel investor Nithia Capital and American global alternative investment manager CarVal Investors have completed the acquisition of Uttam Galva Metallics Limited & Uttam Value Steel Limited.
The purchase worth over Rs 2,000 crore (around $273 million) has been made through their Singapore-based joint venture holding company Wardha Steel Holdings Pte Ltd.
Dr Johannes Sittard, chairman and founding member of Nithia Capital, has been appointed chairman of Wardha Steel, and Jai Saraf, founder and CEO of Nithia Capital, has been appointed chairman of both targets, Nithia Capital said in a statement.
Both the steel players were on the Reserve Bank of India’s (RBI) second list of corporate defaulters referred for resolution under the Insolvency and Bankruptcy Code (IBC).
Bankruptcy proceedings against the two units of Uttam Galva Steel were initiated in May (Uttam Value Steels) and July (Uttam Galva Metallics) 2018. The resolution professional had admitted claims of around Rs 4,176 crore of Uttam Galva Metallics and Rs 3,014 crore of Uttam Value Steels.
The resolution application of CarVal Investors, an arm of US-based food and agriculture group Cargill Inc., and Nithia Capital was approved by the Committee of Creditors (CoC) in April 2019.
The only other final bidder Hong Kong-based SSG Capital Management had challenged this approval.
It was only after about a year that the National Company Law Tribunal (NCLT) approved the resolution plan by Nithia Capital and CarVal Investors.
The plan involved upfront and contingent payment of Rs 1,078 crore for Uttam Value Steels and another Rs 1,576 crore for Uttam Metallics.
Businessman Sajjan Jindal’s JSW Steel Ltd and the UK-based Liberty House had also earlier shown interest in bidding for both the assets but opted not to.
For the year ended March 2020, Uttam Value Steels’ loss widened over 140% to Rs 308.6 crore ($42 million). Its net sales declined 20% to Rs 1,988.8 crore (271.7 million). Standalone debt as on March-end 2020 was Rs 1,443 crore ($197 million).
The latest financials for Uttam Galva Metallics were not available.
This week, it was reported that the two units’ former parent Uttam Galva Steel, which is also being resolved under bankruptcy, attracted interest from four steel companies — ArcelorMittal, JSW Steel, Jindal Steel & Power, and Vedanta-owned ESL Steel — and Phoenix Asset Reconstruction Company (ARC), owned by Kotak Group.
Nithia Capital and CarVal Investors aim to increase the two units’ primary steel-making capacity by 50% in the immediate future by completing partially completed projects in a timely and cost-effective manner, the statement said.
Saraf said, “Nithia Capital envisions to create a consolidated steel operating platform of up to two million tonnes of production per year in India through acquisition and organic growth. We have been looking at multiple steel acquisition opportunities in India over the last few years. We consider India to be the engine of growth for world steel for the next 20-25 years, and it is our intention to actively participate in this process.”
Saraf confirmed this is Nithia Capital's first successful acquisition in India and "we plan to further build on this success".
CarVal Investors is a global alternative investment manager with a total AUM (assets under management) of over $10 billion. It has over 30 years of global track record in opportunistic and distressed credit investment, having invested $113 billion in 5,320 transactions in 79 countries.