At Rs 470 Cr, banks get 34% over reserve price for MSP Metallics

Mumbai: Banks have been third time lucky with the sale of the Odisha-based stressed asset MSP Metallics, managing to get almost 35% more than the minimum, helped by a global commodity supercycle. The sale, translating into a lower haircut for banks, indicates that demand for old steel mills with the necessary approvals and linkages remains strong.

Lead lender

(SBI) had put up the Jharsuguda-based 250,000 tonnes per annum steel plant for sale in April on behalf of a consortium of financiers.

This was the third attempt to sell the NPA after two previous bids failed. Bankers said competition was intense this time, with five bidders pushing up the price in an e-auction to Rs 470 crore for a cash settlement — about 50% higher than the Rs 350 crore reserve price.

The asset owes Rs 1,500 crore to banks.

“CFM ARC has emerged as the highest bidder. Final documents and procedures are being completed, including board approvals from individual banks. It is likely that the deal will be completed by the first week of June,” said a banker involved in the deal.

This is the second successful deal by CFM ARC within a month and closely follows its win to take over another legacy account, polyester maker JBF Industries.

Dinesh Pandey, CEO, CFM ARC, confirmed its successful bid for MSP Metallics. The stressed assets aggregator is confident of finding a buyer to downsell the asset soon because of the upswing in steel demand, he said.

“It was a close fight and we beat the second highest bidder by a mere ?10 lakh. The strong commodity cycle has rekindled demand for such assets, which have all approvals and integrations in place,” Pandey said.