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TMI BlogStrategic Buyer Approved for Privatisation of Neelachal Ispat Nigam LtdX X X X Extracts X X X X X X X X Extracts X X X X ..... Strategic Buyer Approved for Privatisation of Neelachal Ispat Nigam Ltd - News and Press Release Dated:- 31-1-2022 - News - Alternative Mechanism, comprising Shri Nitin Gadkari, Union Minister for Road Transport and Highways, Smt. Nirmala Sitharaman, Union Minister for Finance Corporate Affairs and Shri Piyush Goel, Union Commerce Industry Minister, which is empowered by the Cabinet Committe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on Economic Affairs, have approved the highest bid of M/s Tata Steel Long Products Limited for 93.71% of shares of Joint Venture partners of 4 CPSEs and 2 Odisha Govt State PSEs at the Bid Enterprise Value of ₹ 12,100 crore. Neelachal Ispat Nigam Ltd. (NINL) is a joint venture of 4 CPSEs, namely MMTC, NMDC, BHEL, MECON and 2 Odisha Govt. PSUs, namely OMC and IPICOL. NINL has an integrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed steel plant with a capacity of 1.1 MT, at Kalinganagar, Odisha. The company has been running in huge losses and plant is closed since 30.3.2020. The company has huge debt and liabilities exceeding ₹ 6,600 crores as on 31.3.2021, including huge overdues of promoters (₹ 4,116 crore), Banks (₹ 1,741 crore), other creditors and employees. The company has negative networth of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 3,487 crore and accumulated losses of ₹ 4,228 crore as of 31.3.2021. Govt. of India does not hold any equity in the company. However, on the request of the Boards of selling shareholder PSEs and on concurrence by the Govt of Odisha, CCEA in-principle approved strategic disinvestment of NINL on 8.1.2020, and authorised Department of Disinvestment Public Asset Management (DIPAM) to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertake the transaction. The transaction was made through an open-market, competitive bidding process towards the enterprise value of the company, comprising the liabilities of the company as on 31.3.2021 and the 93.71% equity of the company held by the 6 selling PSE shareholders. The transaction was executed through the extant consultative multi-layered decision mechanism-based procedure inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olving Inter Ministerial Group (IMG), Core Group of Secretaries on Disinvestment (CGD) and the empowered Alternative Mechanism. Govt. of Odisha with their companies, OMC IPICOL having stake of 32.47% was also part of the decision-making at every stage. The Expressions of Interest (EoI) were invited on 25.01.2021. Multiple EoIs were received by the due date of 29.03.2021. The interested partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were given opportunity to undertake due diligence procedure by providing them access to virtual data room of the company. These interested parties also made site visits and were provided with the proposed terms and conditions of the sale in the form of the draft SPA. Considering their feedback, the SPA was finalised on approval by AM, and was shared with the bidders along with the RFP issued on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.12.2021 for inviting financial bids. In response, 3 bids were received by the due date, i.e 23.12.2021 in sealed cover which were kept in safe custody. As per the extant procedure, the Reserve Price was subsequently recommended by the IMG after detailed examination of the valuation reports prepared by the TA and the AV, and was approved by the CGD at ₹ 5616.97 crore. Thereafter, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial bids were opened for the following qualified bidders, who had submitted the bids:- Consortium of M/s Jindal Steel Power Limited and Nalwa Steel and Power Ltd. M/s JSW Steel Limited M/s Tata Steel Long Products Limited (TSLP) M/s Tata Steel Long Products Limited (TSLP) emerged as H-1 bidder, whose bid has been accepted by the AM. Letter of Intent (LoI) is being issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to TSLP inviting them to sign the SPA. At this stage, 10% of the bid amount shall be paid by the successful bidder into the Escrow account. On the closure date, shares will be transferred to the strategic buyer and the balance amount will be received to be utilized in the manner prescribed in the Waterfall agreement 27.10.2021 signed amongst the selling shareholders. Part-sale proceeds would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e infused in the company to the extent of the liabilities which will be set-off and the balance amount in the escrow account will selling shareholders proportional to their shareholding. This is the first instance of privatization of a public sector steel manufacturing enterprise in India. The success of the transaction is a win-win situation for all. The biggest advantage of privatization wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be to the local economy of the region as the strategic buyer will be able to revive a closed plant, bring in modern technology, best managerial practices and make infusion of fresh capital, which will help in augmenting the capacity of the plant. Govt. of Odisha has given active support to the process of privatization. The privatization will help in creating new jobs in the region by creatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of ancillary industries and supplier s network. Keeping in view the best interest of the serving employees, it was decided to keep the employees dues as the top most ranking liability in the Waterfall Agreement to be satisfied first before any other liability. The transaction is on going concern basis and the employees of NINL will continue to be the employees of the company in terms of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Share Purchase Agreement (SPA), which binds the buyer to have a lock-in period of one year. The strategic buyer will also be bound to follow the terms of VRS applicable to CPSEs whenever such a decision is taken. Post-sale consideration will go towards settling of the liabilities of the company, in the order provided in Waterfall Agreement. - News - Press release - PIB Tax Management India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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