FACOR was admitted under Corporate Insolvency Resolution Process in terms of the Insolvency and Bankruptcy Code, 2016 (“IBC”) and the insolvency proceedings were commenced against FACOR pursuant to the order dated July 06, 2017, and March 04, 2019, of the Hon’ble National Company Law Tribunal (NCLT), Kolkata.
NCLT Cuttack, vide its order dated January 30, 2020, under Section 31(1) of the IBC, approved the Resolution Plan submitted by Vedanta Limited for Ferro Alloys Corporation Limited (“FACOR”) under the ongoing corporate insolvency resolution process filed by REC Limited (formally known as Rural Electrification Corporation Limited).
The consideration payable for the acquisition of FACOR on debt and cash-free basis under the approved Resolution Plan is INR 10 Crores as well as the equivalent of cash balance in FACOR’s subsidiary, FACOR Power Limited (FPL) as Upfront Payment and zero-coupon, secured and unlisted Non-Convertible Debentures of the aggregate face value of INR 270 Crores to the Financial Creditors payable equally over 4 years commencing March 2021.
Vedanta Limited will acquire management control and as per approved Resolution Plan, it will hold 100% of the paid-up capital of FACOR. FACOR has a strong presence in the business of producing Ferro Alloys and owns a Ferro Chrome plant with capacity of 72,000 TPA, two operational Chrome mines and 100 MW of Captive Power Plant through its subsidiary, FACOR Power Limited (FPL). The chrome plant and the mines are located in Orissa. The turnover in FY 2019 was INR 580 crore.
Vedanta Ltd has a track record of acquiring firms and turning them around as witnessed with firms such as Cairn Oil and Gas, Hindustan Zinc Limited and Electrosteel Ltd to name a few. The acquisition will complement Vedanta’s existing steel business as the vertical integration of Ferro manufacturing capabilities has the potential to generate significant efficiencies and will help Vedanta to increase its portfolio in the steel business.
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