New Delhi: JSL Stainless Ltd is in talks with lenders of sick steel maker Shah Alloys for a potential buyout, but is months away from a deal, a source directly involved in the talks told Reuters.
“It’s very early days. Lenders have initiated talks but Shah Alloys promoters are still not involved in the talks. A deal will depend on lenders and promoters. You can’t force a deal on anyone,” the source who declined to be named, said.
He said a deal would go through only if the valuation is very attractive as JSL Stainless has just restructured its debt and will need approval from its lenders for any deal.
The Economic Times on Wednesday reported JSL, India’s largest stainless steelmaker, was in talks to buy Ahmedabad-based Shah Alloys as part of a lenders-initiated exercise to revive the steelmaker that was declared sick in September. JSL was also in talks to buy SAL Steel, in which Shah Alloys owns 35 %, it said.
Shah Alloys, whose shares rose 19% on Tuesday and extended gains by another 20% to Wednesday’s high of Rs 19.08, denied negotiations with JSL in a statement to the stock exchanges.
According to data at the end of December, Shah Alloys’ promoters held a 54.19 stake in the company.
JSL Stainless told the Mumbai stock exchange it was not negotiating with Shah Alloys “at present”, but would continue to evaluate different opportunites and re-evaluate old opportunities.
Shah Alloys owes Rs 600 crore to lenders Union Bank of India, State Bank of India, Punjab National Bank, IDBI, Axis Bank and Bank of Maharashtra, the Economic Times said.
JSL shares were down 0.3% at Rs 90.65 at 3:05 p.m., while Shah Alloys shares were up 8.18% at Rs 17.20 and the overall market was down 0.6%.