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Twenty banks and four other lending institutions will jointly hold 53.27 per cent stake in Electrosteel Steels (ESL) after the proposed conversion of part of its debts worth about ₹2,508 crore into equity.
EGM on Jan 7According to ESL, the proposed conversion, kicked off by the Strategic Debt Restructuring (SDR) package approved by the Joint Lenders Forum, will bring the current promoters’ holding down to 22.16 per cent from 45.23 per cent.
Banks, at present, have less than 1 per cent stake in ESL. ESL will hold an extraordinary general meeting of the shareholders of the company on January 7, 2016, to consider the conversion and enhancement of authorised capital.
ESL’s ₹9,600-crore debt has been put through an SDR package by lenders, led by SBI. The SDR package will also result in a new strategic investor coming in, which will increase the financial viability of the steel-maker that had got bogged down by project implementation issues causing cost and time overruns. In recent months, lower steel product prices and burgeoning finance costs created a financial viability gap for ESL.
SBI to get 15% stakeLenders expect to identify the strategic investor by the end of this month. London-based fund house First International Group Plc and Tata Steel are learnt to have shown interest in ESL’s project at Bokaro in Jharkhand.
In one of the largest conversions of corporate debt into equity in the country, which is exempt from open offer norms, SBI will get to hold 15.17 per cent stake in the firm, followed by PNB at 3.42 per cent. IOB will get to hold 2.44 per cent stake in Electrosteel Steels, Canara Bank 2.43 per cent, and State Bank of Hyderabad and UCO Bank 2.37 per cent each. Srei Infrastructure Finance will hold 2.34 per cent.
Among the lenders, SBI has the largest exposure in ESL.
Among the under-1 per cent equity holders will be LIC, IL&FS Financial Services, Vijaya Bank, Syndicate Bank, Punjab & Sind Bank, J&K Bank, Indian Bank, Dena Bank and ICICI Bank, among others.
On Friday, the ₹10 face value stock of ESL closed at ₹3.66 on the BSE.
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