VC Circle reported that the bidders are interested in its iron ore and coal reserves even as the bidding war is at works for Orissa Sponge Iron & Steel Co.

Mr Jajodias promoted Monnet Ispat & Energy has hiked the open offer price to buy additional 20% stake from public shareholders of Orissa Sponge by over 19% to INR 370 a share, or INR 10 more than what Bhushan Steel & Power has offered in its ongoing open offer. Monnet had earlier offered INR 310 a share.

The fate of the competing bids was however sealed a long time back when Mohantys promoters of Orissa Sponge converted their warrants into equity and hiked their holding from 33% to 43% in early 2009 and at the same time, inked a partnership with the Jajodias.

Monnet Ispat Group has made the competing offer with Mohantys as a ‘person acting in concert’. The two already own over 50% stake in the company, which clocked revenues of INR 99 crore with net loss of INR 72 crore.

What the bidders are interested in is its iron ore and coal reserves, key raw material for producing steel the primary business of both Bhushan Steel and Monnet Ispat.

With the conversion of Bhushan Steel’s outstanding warrants into equity getting mired into legal tussles, it remained a minority investor and made a hostile bid. Last month, Bhushan Steel revised its bid size from 20% of the company to 26% at INR 360 a share. Bhushan Steel as a group owns around 16% in Orissa Sponge Iron.

Even if Bhushan Steel’s open offer is successful, its holding would remain below Mohanty-Jajodias combine. However it may be placing its bets on garnering a large stake now and hoping for a positive result in its favor over the disputed warrants, which if converted into equity could have made it a serious challenger to take over the Bhubaneswar based company.

Source - www.vccircle.com

(www.steelguru.com)