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Vedanta Resources bid for Electrosteel Steels ruled eligible

Vedanta Resources
Asia   The unit will acquire a 90% stake in Electrosteel for $275.7 million

Miner Vedanta Resources said an Indian court has ruled that its unit Vedanta's bid for Electrosteel Steels was eligible.


A Kolkata National Company Law Appellate Tribunal ordered that Vedanta Ltd was not barred by section 29A(d) of the Insolvency and Bankruptcy Code.

The tribunal also declined to interfere with the approval of the resolution plan, which states the transaction fees and expenses will be paid $ing the company's existing cash resources.

In April, Vedanta Ltd secured court approval to acquire Electrosteel Steels Ltd from insolvency.

The unit will acquire a 90% stake in Electrosteel for $275.7 million and provide additional debt funding of $536.9 million. The remaining 10% of Electrosteel's share capital will be held by Electrosteel's existing shareholders and creditors who received shares in exchange for the debt owed to them.

Electrosteel owns and operates a greenfield integrated steel manufacturing facility in the Indian state of Jharkhand, which has a current capacity of 1.5 million tonnes per annum and the potential to increase to 2.5 mtpa.

For the nine months ended December, the steel company reported a total income of $372.8 million and a loss of $132.4 million.

Vedanta Ltd expects the acquisition to complement its existing iron ore b$iness as the vertical integration of steel manufacturing capabilities has the potential to generate significant efficiencies. It does not expect the deal to have any material impact on earnings for the financial year ending March 31 and anticipate returns to be received in the following years.

 

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