Liberty House Acquires SBQ Steel
VC Circle, citing a person in the know, reported that UK based Liberty House Group has completed its second acquisition under the bankruptcy process with the purchase of an Andhra Pradesh based steel firm SBQ Steels, flagship company of Nellore based RKKR Group, ordered for liquidation. The source told VCCircle “Liberty signed a definitive agreement with SBQ Steels for around INR 270 crore.”
The deal with SBQ Steels means a massive haircut of over 94% for creditors. Edelweiss Asset Reconstruction Company holds 82% of the total debt owed to financial creditors
In 2017, bankruptcy proceedings were initiated against SBQ Steels on a petition filed by Indian public sector lender Union Bank of India. The firm had admitted claims worth about INR 4,266.67 crore of secured financial creditors including Edelweiss ARC, Bank of Baroda and Union Bank of India. The admitted claims of unsecured financial creditors were about INR 80.24 crore and operational creditors were INR 344 crore. With efforts to find a buyer not bearing fruit, the National Company Law Tribunal ordered for liquidation in 2019. On July 21 this year, the NCLT allowed a fresh auction for sale of SBQ Steels after Switzerland based commodity trading firm IMR Mettalurgical Resources AG lowered its bid in the third auction from INR 200 crore to INR 190 crore. The reserve price for the auction was fixed at INR 218.70 crore, 10% lower than INR 243 crore fixed in the third auction. Liberty outbid Switzerland based IMR Mettalurgical Resoruces to emerge the highest bidder during liquidation with a INR 262 crore offer in August. However the company could not pay in three months stipulated. Earlier this month NCLT directed Liberty to make the payment in two days which was done last week
Located 15 km away from the Krishnapatnam Port in a 675 acre facility, SBQ Steels manufactures pig iron, sponge iron, metal billets, bars, and wire rods, With an integrated steel plant of approximately 0.25 million tonnes per annum capacity, SBQ Steels caters to the steel requirements of automobile and engineering sectors, and also to the nuclear power industry in India and abroad. Some of its plants became inactive after December 2013 due to working capital challenges and downturn in the steel industry while its rolling mill plant remained defunct since November 2017. The steel plant also has two power plants with 45MW capacity each.
This is the second buy by Liberty after acquiring Adhunik Metaliks and its associate Zion Steel in February 2020 under the insolvency law for a cash consideration of INR 425 crore.