ICICI welcomes Ispat deal, loan repayed

The country's largest private lender, ICICI Bank, on Tuesday described the deal between JSW Steel and Ispat Industries as "positive", for both the steel sector in India as well as debt-ridden Ispat Industries.

"The entry of a large strategic investor into the company (Ispat) will strengthen its balance-sheet and enable productive utilisation of its capacity," the bank's MD & CEO Chanda Kochhar said.

Ispat Industries, which is under corporate debt restructuring (CDR), is promoted by Pramod and Vinod Mittal, brothers of the world's fifth-richest person - Lakshmi Mittal.

Earlier in the day, the Sajjan Jindal-led JSW Steel said it is purchasing shares of Ispat Industries worth Rs 2,157-crore at Rs 19.85 a share.

Ispat Industries will issue on a preferential basis, 108.66-crore equity shares at Rs 19.85 per share for a consideration of Rs 2,157-crore. In addition, JSW will make an open offer to the minority shareholders of Ispat Industries as per SEBI guidelines, JSW Steel said in a statement.

While JSW's holding will be at 41.29 per cent on completion of the preferential allotment, with a scope to go up based on the outcome of the open offer, the existing promoters will hold 26 per cent on completion of the transaction.

Dilution of holding for both the parties will occur in case of capital raising in the future. JSW will further re-finance the entire outstanding debt of Ispat, it said.

"This transaction protects the interests of lenders and enhances value for other stakeholders. Further, this transaction also benefits the economy as a whole, as it will lead to optimal and efficient utilisation of one of the largest steel-making facilities in the country at a time when we are embarking on a major investment drive," Kochhar said.

Meanwhile, the bank is understood to have received Rs 250-crore out of the Rs 1,700-crore it has lent to Ispat Industries.

"Today, ICICI bank received Rs 250-crore from the company," a source close to the development said.

The company has also assured the lender of repayment of the outstandings within nine-months, the source added.

The company has a debt of Rs 7,500-crore and its lenders include IDBI (around Rs 2,500-crore), State Bank of India (around Rs 1,500-crore) and IFCI (also around Rs 1,500-crore) with the balance owed to other banks.