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Electrosteel Steels, undergoing the insolvency resolution process, has allotted equity shares worth Rs 7,400 crore to lenders as loan conversion, with SBI getting the largest chunk -- about 37 percent. The company had yesterday spelled out steps to be taken for completion of its takeover by Vedanta Star Ltd, an arm of mining giant Vedanta which won the bid to acquire the stressed firm.
It has allotted nearly 740 crore equity shares to 26 lenders, out of which the country's largest lender State Bank of India got the largest 36.70 percent chunk -- 271.61 crore equity shares.
"The company has issued and allotted 7,399,132,055 equity shares of Rs 10 each on a preferential/private placement basis to financial creditors of the company...pursuant to conversion of loan equivalent to Rs 73,991,320,550 in terms of Resolution Plan approved by National Company Law Tribunal- Kolkata Bench," Electrosteel Steels said in a regulatory filing to the BSE today.
After SBI, Punjab National Bank (PNB) got the highest number of 46.70 crore shares, 6.31 percent of the total allotted shares.
Another lender Canara Bank got 5.15 percent of the allotted shares - 38.13 crore shares, followed by UCO Bank getting 5.02 percent - 37.17 crore shares.
The shares allotted to Indian Overseas bank, SREI Infrastructure & Finance Ltd and Oriental Bank of Commerce ranged from 4.43 per cent to 4.63 percent of the total shares allotted. The rest of the lenders got less than 4 percent each.
In a filing to the BSE, Electrosteel had said yesterday that since liquidation value of the company as determined by the Resolution Professional is not sufficient to cover the debt of financial creditors in full, the liquidation value of the company in the hands of equity shareholder is nil.
However, it had added that "as per the Resolution plan, the shareholder of the company will be paid Rs 0.19 per equity share they hold as on date (Pre-capital Reduction Price).
"On completion of Transaction Steps, Vedanta Star Ltd will make the delisting offer to the then shareholders of the company. The equivalent per share exit price post completion of Transaction Steps is Rs 9.54 per equity share (Post-capital Reduction Price)".
In March, Vedanta was declared as successful resolution applicant by the committee of creditors (CoC) for Electrosteel Steels Ltd under the Corporate Insolvency Resolution Process of the Insolvency and Bankruptcy Code, 2016.
Vedanta Ltd had earlier this week deposited an upfront amount of Rs 5,320 crore in the escrow account of Electrosteel Steels Ltd.