According to the market reports, Sanjeev Gupta led Liberty House’s bid for acquisition of Adhunik Metalaliks has won the approval of CoC (Committee of Creditors). This bid will be presented to NCLT (National Company Law Tribunal) further for approval, and once approved the UK headquartered Liberty House will be finally able to enter India.
Liberty House had been trying to enter India three times since 2005 but backed off as the company felt that the policy environment and market conditions in India were not favourable for the investment.
Adhunik Metalaliks is an integrated steel maker that has a production unit in Chadrihariharpur, near Rourkela, in Odisha. The plant’s capacity can be expanded to one MnT per annum and company’s integrated operations include sponge iron, blast furnace, electric furnaces and downstream rolling of finished steel products.
The plant’s various facilities produce ferro alloys, billets, bars, and rounds, serving customers in the automotive, engineering, oil & gas, telecom, defence, power, railways, and construction segments.
Adhunik Metaliks is the second stressed asset in India for which Liberty House has got the go-ahead. Creditors of Amtek Auto (an integrated automotive component manufacturer), which was also referred to the NCLT, have given the green signal to Liberty House. Interestingly Amtek Auto is a client of Adhunik Metaliks. Thus, Adhunik’s integrated operations and supply linkages to downstream industry, especially to Amtek Auto will enable Liberty House to build its value chain progressively.
How Adhunik Metaliks landed into bankruptcy trouble?
According to the market reports, Adhunik Metaliks has been facing financial difficulties since 2013. During the year company’s lenders invoked Corporate Debt Restructuring (CDR) scheme under which financial institutions and banks come together to restructure the debt of companies that face financial difficulties. However, this scheme failed.
In September 2015, Adhunik Metaliks informed shareholders that its bankers had decided to invoke Strategic Debt Restructuring (SDR) and convert debt into majority equity. It was one of the first few companies shortlisted under SDR. But this scheme was also not implemented successfully resulting which lenders were eventually forced to go for insolvency resolution.
Adhunik Metaliks was admitted under the IBC (Insolvency and Bankruptcy Code) by the Kolkata bench of the National Company Law Tribunal in August 2017.
Adhunik Metaliks owes lenders (a consortium led by State Bank of India) nearly INR 5,400 crore as per the company’s website. It includes claims for two other group entities: Zion Steel Ltd. and Orissa Manganese & Steel Ltd. The dues have been consolidated because they have obligor/co-obligor arrangements where same banks loaned money to all three.
Apart from Liberty House, Maharashtra Seamless was also interested in the assets of the stressed company.
Liberty House’s efforts to acquire another steel major BPSL
This year, Liberty House had also submitted its resolution plan for country’s key steel player BPSL (Bhushan Power and Steel Ltd) which is currently undergoing insolvency proceedings. However, lenders of BPSL had rejected the resolution plan submitted by Liberty House citing delay in plan submission following which the UK based group moved to NCLT.
On 23 Apr’18 NCLT had directed BPSL’s lenders, led by PNB, to consider the bid submitted by Liberty House.
This order was later challenged by Tata Steel, another resolution applicant of BPSL, before NCLAT, which is listed on 12 Jul’18 for hearing.
Now, as per the latest updates, Liberty House has moved to NCLAT against CoC and resolution professional of BPSL seeking information on the bid finalisation process of the company.
In its plea, Liberty House has alleged that lenders are not sharing any information or documents related to their meeting, which was convened on Monday i.e. 9 Jul’18.
Subsequently, the appellate tribunal has asked BPSL’s lenders to address the grievances of Liberty House and has also directed to list Liberty House’s plea on 12 July, when the main matter related to BPSL would come up for hearing.
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