Numetal Offers To Repay Odisha Slurry Pipeline’s Debt To Take Control
VTB Bank-led special purpose vehicle, Numetal Mauritius, has offered to fully repay lenders of Odisha Slurry Pipeline Infrastructure Ltd. to gain control of 70 percent equity stake, people in the know confirmed.
The Mauritius-based entity has offered to pay over Rs 2,000 crore for this purpose, the people quoted above said.
In a letter it wrote to its lenders on March 28, OSPIL has said that it has received in principle commitment for refinancing all of its debt obligations and that it will be able to repay them by April 30. BloombergQuint has reviewed a copy of the letter.
The communication was in response to a loan recall notice which the lenders had sent on Feb. 15, OSPIL said in its letter.
This is the second attempt by Numetal to gain control of OSPIL. On Feb. 12, BloombergQuint had reported that Numetal had entered into an agreement to purchase controlling stake in the pipeline company by paying Rs 1,500 crore to India Growth Opportunities Fund. At the time, lenders had blocked the transaction stating that as per the loan contract that OSPIL had signed with them, any changes in ownership would require their approval.
The ownership of the slurry pipeline is currently under dispute. In 2015, Essar Steel had first entered into a sale and leaseback arrangement with Srei Group-promoted India Growth Opportunities Fund to sell 70 percent stake in OSPIL. However, in 2016, Essar Steel backed out of the agreement since its lenders had not given their approval for it. Since then, the fund has been fighting for ownership of the pipeline.
Also Read: Bidders Disagree On Essar Steel Re-Bid
If successful, Numetal would have considerable sway over the resolution process currently underway at Essar Steel Ltd. The 253-kilometer long pipeline is use to transport half the raw materials required to produce iron ore pellets at Essar Steel's plant in Paradip, Odisha. It is the cheapest available route to transport this raw material and therefore is crucial for Essar Steel's ability to produce steel.
Essar Steel is one of the largest accounts being resolved under the insolvency and bankruptcy code. It owes over Rs 49,000 crore to its financial creditors. The resolution professional appointed in Essar Steel has already deemed ineligible the bids submitted by Numetal and ArcelorMittal India, citing concerns under Section 29A of the code. The committee of creditors took on the resolution professional's recommendation and have called for a rebidding process, where the six companies which had originally submitted an expression of interest for Essar Steel will be allowed to bid for it again.
Also Read: ArcelorMittal To Challenge Lenders' Decision To Reject Its Bids For Essar Steel
Numetal's shareholding has a Ruia family member as a minority investor, while ArcelorMittal was considered ineligible as they were still classified as promoters of Uttam Galva Steels Ltd., where they subsequently sold their 29 percent stake. Section 29A of the IBC prevents promoters of stressed companies from bidding under the insolvency process.
Both Numetal and ArcelorMittal have challenged the committee of creditors' decision at the Ahmedabad-bench of the National Company Law Tribunal, hearings for which are still underway.
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