JSW’s offer to buy Monnet Ispat stake was not good enough, SBI tells NCLT
Mumbai: State Bank of India (SBI) on Thursday told the National Law Company Tribunal (NCLT) that it did not accept JSW Steel Ltd’s offer to buy lenders’ 51% stake in Monnet Ispat and Energy Ltd because the consortium was not happy with the proposal.
The Mumbai bench of the tribunal was hearing the insolvency application by the bank against Monnet Ispat, one among the 12 cases identified by the Reserve Bank of India (RBI)’s internal advisory panel for speedy resolution.
In August 2015, lenders had invoked the Strategic Debt Restructuring (SDR) mechanism after the company defaulted on loan repayments. At that time, they had converted debt worth Rs350 crore to a 51% stake.
SDR allows banks to take over management control of a defaulting company by conversion of debt into equity. At the end of March 2017, Monnet Ispat owed Rs10,333 crore.
Following the share conversion, lenders sought bids from interested buyers as RBI rules mandate them to sell at least 26% of their stake within 18 months to a new buyer.
In February, JSW Steel had expressed interest to buy the majority stake of the lenders. However, lenders did not accept the offer because it entailed banks to accept significant haircut to resolve the asset, according to bankers.
Separately, JSW Group chairman Sajjan Jindal said the firm will review its offer to buy a stake in Monnet Ispat. He was speaking at the annual general meeting of JSW Energy Ltd on Thursday.
The NCLT also sought clarity on the amount mentioned by SBI in its application as the bank had mentioned a default as well as the due amount. The counsel representing the company also sought additional documents from the bank on the due amount.
The next hearing is scheduled on 17 July.
Monnet Ispat continues to face stress on its financials.
On Tuesday, the company reported a loss of around Rs399 crore for the June quarter due to lower sales and higher interest cost. This was the 12th straight quarter the company lost money.
Shakti Patra contributed to this story.