India Digest: Promoters vying to regain control of Essar Steel; SBI to sell bad education loans

Photo: Bloomberg

Promoters Shashi and Ravi Ruia are in the process of forming a consortium to bid for Essar Steel, which is facing bankruptcy proceedings at the National Company Law Tribunal. Meanwhile, State Bank of India is set to sell a sizable portion of its non-performing education loans portfolio to clean up its retail loan book.

Promoters vying to regain control of Essar Steel

Promoters Shashi and Ravi Ruia are in the process of forming a consortium along with Russian bank VTB and Hong Kong-based special situations fund SSG Capital to bid for Essar Steel, which is facing bankruptcy proceedings at the National Company Law Tribunal, said an Economic Times report.

However, as per the Bankruptcy Code (IBC), promoters cannot regain control of their companies unless they settle pending dues. The proposed consortium shall also comprise a few Essar Group employees, the report said.

Quoting an unnamed person, the report said that the Ruia brothers have already floated a special purpose vehicle that will be managed by the team comprising a former senior public sector banker and a former Steel Authority of India (SAIL) head. Law firm Khaitan & Co would act as an adviser on the same.

“VTB is organising the funds. The Essar promoters may retain a small minority stake of 10-20%, while SSG and VTB will be the principal shareholders. Essar has sought legal opinion and are confident that they have a strong chance in retaining the asset,” the report said quoting an executive.

Essar Steel owes lenders about Rs 45,000 crore, of which Rs 31,671 crore became non-performing as of March 31, 2016. The company owes as much as 93% of the amount to a consortium of 22 creditors led by State Bank of India.

SBI to sell portion of bad education loans

State Bank of India is set to sell a sizable portion of its non-performing education loans portfolio to clean up its retail loan book, said an Economic Times report.

The lender has invited bids from asset reconstruction companies (ARCs) for an education loan portfolio amounting to Rs 382 crore that was given to 20,891 students, the report said.

The bank has set a reserve price, or a floor price, of Rs 114.6 crore for an all-cash offer, and a price of Rs 152.8 crore in case of a combination of cash and security receipts. In the latter situation, bank would prefer 50 per cent of the consideration amount in cash.

SBI’s non-performing assets in education loans was estimated at Rs 538 crore, while that of Punjab National Bank at Rs 478 crore as on March 2017.

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