Modern Steels Approves Slump Sale
component business, as a going concern on a slump sale basis, by way of a business transfer agreement, to a wholly owned subsidiary to be incorporated by Arjas Steel Private Limited by the name of Arjas Modern Steel Private Limited and authorize Mr Krishan Kumar Goyal Chairman & Managing Director of the Company to negotiate, finalize and execute the business transfer agreement and Transaction Documents required to be executed in connection therewith on behalf of the Company. The transaction is expected to be worth INR 120-130 crore and is likely to close this month.
According to a report in Mint, Modem Steels Ltd is in advanced discussions with private equity firm ADV Partners, which bought out Gerdau Steel India from Brazilian conglomerate Gerdau SA for USD 120 million and renamed as Arjas Steel, which operates a 300,000 -tonne special steel plant in Tadipatri in Andhra Pradesh, besides two captive power plants. Sources told Mint “The promoters are talking to two to three investors for a settlement, but ADV is ahead in the race.”
Modern Steels manufactures special and alloy steel, especially for the automotive sector, stainless steel and bright bars, and has an annual capacity of 150,000 tonnes. The company was classified as a non-performing asset in 2018 by its lenders State Bank of India, Canara Bank and Punjab National Bank in 2018. Subsequently, the first two lenders sold their outstanding debt to Edelweiss’s asset reconstruction arm. PNB still retains its exposure to the company. On 6 November, Modern Steels said in a stock exchange filing that it was discussing a proposal to sell its assets on a slump sale basis and will make a one-time settlement of its debt with Edelweiss ARC.