CCI Grants Approval To Vedanta To Acquire Electrosteel Steels

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After the resolution plan submitted by Vedanta for Electrosteel Steels has been approved by the National Company Law Tribunal (NCLT) last month, Vedanta said it has now got the approval from the fair trade regulator CCI to acquire the bankrupt Electrosteel Steels Ltd.

CCI Grants Approval To Vedanta To Acquire Electrosteel Steels

In a filing to the BSE, the Indian subsidiary of the mining entity Vedanta Resources said, "Vedanta Ltd (the company) has today received the approval from the Competition Commission of India (CCI) for the application made by it for the acquisition of Electrosteel Steels Ltd". Further to this CCI tweeted that it sees no "Appreciable Adverse Effect on Competition (AAEC) in respect of proposed acquisition of Electrosteel Steels by Vedanta".

With the NCLT's go-ahead given to the resolution plan proposed by Vedanta for Electrosteel, it shall be the first of the twelve stressed accounts identified by the RBI to be resolved within the framework of the Insolvency and Bankruptcy Code.

In an order the NCLT said, "the resolution plan of corporate debtor Electrosteel Steels Ltd which is approved by the CoC (Committee of Creditors) with a voting share of 100 per cent under section 31 (1) of the Insolvency & Bankruptcy Code 2016" has been approved.

The resolution plan includes approximately Rs 5,300 crore in cash pay-out in addition to a haircut of 60 per cent of the total banks' debt. The bankrupt entity Electrosteel Steels over Rs. 13,000 crore in debt to different lenders and of this amount Rs. 5000 crore is to SBI itself.

After the suggested resolution plan is implemented 90% of the Electrosteel's paid-up share capital will be held by Vedanta and the remaining 10% will be owned by the existing shareholders and creditors of Electrosteel.

In a statement Vedanta said, "one of the company's wholly-owned subsidiaries will subscribe to the share capital of Electrosteel for an aggregate amount of Rs 1,805 crore (USD 275.7 million) and provide additional funds aggregating to Rs 3,515 crore (USD 536.9 million) by way of debt".

This acquisition by the metals and mining group Vedanata of Electrosteel will support the company's plans of value addition through the latter's assets in Jharkhand.

Additionally Vedanta said that, "the funds received by Electrosteel as debt and equity will be used to fully settle the debts owed to the existing financial creditors of Electrosteel, by payment of Rs 5,320 crore (USD 812.6 million)".

Electrosteel runs an integrated steel manufacturing unit in Jharkhand near Bokaro with a annual capacity of 1.5 million tonnes.

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