Tata Steel Products to buy Neelachal Ispat Nigam for ₹12,100 crore
The Cabinet Committee on Economic Affairs has approved Tata Steel Long Products's top bid for 93.71% of Joint Venture's 4 CPSE partners and two Odisha government PSEs with a Bid Enterprise Value value of ₹ 12,100 crores.
Tata Steel Long Products for 93.71% of Shares
The government on Monday approved the sale of Neelachal Ispat Nigam Limited (NINL) to Tata Steel Long Products. The Cabinet Committee on Economic Affairs approved Tata Steel Long Products's highest bid of 93.71% of Joint Venture's four CPSE partners and two PSEs of the Odisha government at a cost of entering 12,100 crore Bid Enterprise Value.
The government does not have any equality in the company. “At the request of the shareholding of PSE shareholders and in line with the Government of Odisha, CCEA ‘in-principle' authorized the disbandment of NINL strategies on 8.1.2020, and authorized the Department of Investment and Public Asset Management to carry out this work,” read the official release.
NINL is a joint venture of 4 CPSE businesses – MMTC, NMDC, BHEL, MECON, and 2 Odisha government PSUs – OMC and IPICOL.
NINL has a 1.1 MT integrated steel industry, located in Kalinganagar, Odisha. The company has been operating with significant losses and the industry has been closed since March 30, 2020.
The company has significant debt and debts exceeding R6,600 crore as of 31 March last year, including significant overdue for promoters (₹ 4,116 crores), Banks (₹ 1,741 crores), other creditors, and employees.
The company has a gross value of ₹ 3,487 crores and a net loss of R4,228 crore as of March 31, 2021, the statement said.
“This work is done through an open, competitive market bidding process for the company's business value, which includes corporate debt from 31.3.2021 and 93.71% of the company's equity held by 6 shareholders who sell PSE,” he said.
The release continued, “This work is done through a consultative process based on multi-sectoral decisions involving the Inter-Ministerial Group (IMG), the Central Secretariat for Investment (CGD), and the Alternative Mechanism. The government. of Odisha and its subsidiaries, OMC & IPICOL with a value of 32.47% was also involved in decision-making at all levels.”
“Expressions of Interest (EoI) was invited on 25.01.2021. Most EoIs were received by the deadline of 29.03.2021. and were provided with the terms and conditions of the proposed sale in the form of a SPA framework. Considering their response, the SPA was finalized with the approval of AM and shared with the video and the RFP was issued on 03.12.2021 to invite financial bids, he added.
In response, three bids received by the deadline, i.e. December 23, 2021, are closed, kept in a secure cell.
According to the existing procedure, the Retained Value was then recommended by IMG after a detailed review of the evaluation reports prepared by TA and AV, and approved by CGD at ₹ 5616.97 crores.
Thereafter, financial bids were opened for the following eligible bidders:
- A consortium of Jindal Steel & Power Limited and Nalwa Steel and Power Ltd.
- JSW Steel Limited
- Tata Steel Long Products Limited (TSLP)
TSLP Emerged as H-1 Bidder
TSLP emerged as an H-1 buyer, his request was approved by AM. Letter of Intent (LoI) issued to the TSLP invites them to sign the SPA. At this stage, 10% of the bid amount will be paid successfully to apply to the Escrow account.
On the closing date, the shares will be transferred to a prudent buyer and the balance will be made available for use in the manner set out in the Waterfall agreement dated 27.10.2021 signed between the shareholders. Part of the sale will be credited to the company up to the level of debt to be paid and the balance of the balance in the escrow account will sell to shareholders in proportion to their shares.
This is the first time in the secrecy of the steel industry of the public sector in India. The biggest benefits of private practice will be to the region's local economy as a high-value consumer will be able to revitalize the closed industry, bring modern technology, better management practices, and invest in new ones, which will help boost the industry's power, the government said.
The work is based on “ongoing concern” and NINL employees will continue to be corporate employees in accordance with the Share Purchase Agreement (SPA), which obligates the consumer to be detained for up to one year. when such a decision is made.
Post-sale processing will depend on the company's debt repayment process, according to a plan provided in the Waterfall Agreement, the statement said.