Monnet Ispat & Energy Ltd.

Total plan funding, as printed

Upfront cash payment of ~Rs.2457 crores (less liquidation value paid to dissenting secured financial creditors) to assenting secured financial creditors, along with conversion of Rs.215.20 crores into equity and deemed conversion of remaining admitted debt into OCPS deemed purchased for an aggregate of Rs.219.92 crores; plus Rs.25 crores to operational creditors

Upfront amount, as printed

~Rs.2457 crores to assenting secured financial creditors (para 6), payable within 30 days from the date of this order (24.07.2018) per the Letter of Intent (para 8)

Deferred amount, as printed

Rs.25 crores to operational creditors (other than employees and workmen), within a period of one year from the date the final resolution plan becomes effective

Payout horizon as printed

Upfront payment to financial creditors within 30 days from the date of this order (24.07.2018); Rs.25 crores to operational creditors within one year from the date of delivery of this order (24.07.2018)

Cirp cost treatment

provided for payment of insolvency resolution process costs in the manner specified by the Board, in priority to the repayment of the other debts of the Corporate Debtor

Units note

Narrative figures in paras 6-10 printed in Rs. crore; admitted-claims table (para 5) and financial-creditor distribution table (para 7) printed in absolute rupees / crore as OCR-rendered (scan-garbled in places)

Narrative figures in paras 6-10 printed in Rs. crore; admitted-claims table (para 5) and financial-creditor distribution table (para 7) printed in absolute rupees / crore as OCR-rendered (scan-garbled in places)

Body of order · 9 rows

1. Seq

   1

   Beneficiary

   Assenting Secured Financial Creditors

   Amount as printed

   ~Rs.2457 crores (upfront cash payment, less liquidation value paid to dissenting secured financial creditors), pro rata basis

   Timing as printed

   within 30 days from the date of this order (24.07.2018), per the Letter of Intent

2. Seq

   2

   Beneficiary

   Assenting Financial Creditors (debt-to-equity conversion)

   Amount as printed

   Rs.215.20 crores converted into equity shares of the Corporate Debtor, in proportion to admitted debt

   Timing as printed

   on the effective date, per the Resolution Plan

3. Seq

   3

   Beneficiary

   Assenting Financial Creditors (OCPS)

   Amount as printed

   Remaining admitted debt deemed automatically converted into Optionally Convertible Preference Shares (OCPS), deemed purchased by the Resolution Applicant for an aggregate of Rs.219.92 crores, thereafter deemed extinguished

   Timing as printed

   per the Resolution Plan

4. Seq

   4

   Beneficiary

   Operational Creditors (other than employees and workmen)

   Amount as printed

   Rs.25 crores (against admitted debt valuing Rs.114,81,27,623 per Exhibit A to Affidavit filed 13.07.2018), pro rata, pari passu

   Timing as printed

   within one year from the date of delivery of this order (24.07.2018)

Entity type

consortium

Consortium members

1. AION Investments Private II Limited
2. JSW Steel Limited

Sources of funds

Upfront cash payment of ~Rs.2457 crores (less liquidation value paid to dissenting secured financial creditors) to assenting secured financial creditors; conversion of Rs.215.20 crores of debt into equity shares; deemed automatic conversion of remaining admitted debt held by assenting financial creditors into Optionally Convertible Preference Shares (OCPS) deemed purchased by the Resolution Applicant for an aggregate of Rs.219.92 crores; Rs.25 crores to operational creditors (other than employees/workmen) within one year of the plan becoming effective

Post plan management

Until the Corporate Debtor is acquired by the Resolution Applicants, it is managed and controlled by an Interim Board appointed by the Steering Committee approved by the CoC; the Resolution Applicant to acquire management and control on the effective date

Statutory dues

The Resolution Applicant is bound to pay all taxes and other government dues from the date this plan comes into effect; the plan does not become an exemption from paying taxes to the government

Operational creditors

Liquidation value due to operational creditors under the Section 53 waterfall is NIL; on the Bench's suggestion, the Resolution Applicant filed an Affidavit agreeing to pay Rs.25 crores within one year from the date the final resolution plan becomes effective, to operational creditors (other than employees and workmen), against admitted debt valuing Rs.114,81,27,623, to be paid pro rata in compliance with the principle of pari passu

Workmen employees

Operational Creditors (only workmen and employees, unsecured) claimed Rs.2,210,000, shown separately in the admitted-claims table from other operational creditors

Guarantors

Approval of the Final Resolution Plan shall not extinguish the rights of members of the CoC or the liability of existing promoters under the personal guarantees/sureties/indemnities executed by them in favour of members of the CoC; financial creditors and other creditors continue to be entitled to enforce their rights against the existing promoters, and the existing promoters continue to be liable in relation to any pending litigation against them

Litigation carveout

All other liabilities and obligations of the Corporate Debtor are extinguished in full, and all litigations/proceedings in respect of debts pending against the Corporate Debtor prior to commencement of CIRP stand abated, since the liquidation value due to those creditors under the Section 53 waterfall is NIL

Group entities

Merger of a newly incorporated Bidding Company ("Bid Co", wholly held directly or indirectly by the Resolution Applicants) with and into the Corporate Debtor on the effective date; proposed slump sale of non-core assets to a newly incorporated subsidiary ("Newco") not approved by the Bench

Assets description

Steel/mining corporate debtor with plants/facilities at Raipur and Raigarh; Resolution Plan included disputed Gare Palma IV/7 mine rights, which the Bench (per its own order dated 16.01.2018) held have not been conferred on the Corporate Debtor; also includes non-core assets proposed for slump sale, not approved

RP replaced the IRP

No

Invitations for expressions of interest

1. Round no

   1

   Form g date

   2017-09-16

   Eoi last date

   2017-09-25

   Plans received

   1

   Outcome

   plan approved

Applicants considered

1. Name

   AION Capital Partners Limited

   Stage reached

   plan_submitted

   Outcome note

   Part of the consortium (with JSW Steel Limited) that submitted the resolution plan on 12.12.2017; subsequently replaced in the consortium by its 100% subsidiary AION Investments Private II Limited, after CoC approval by 87.88% majority at the meeting held on 23.02.2018

2. Name

   AION Investments Private II Limited

   Stage reached

   approved

   Outcome note

   Substituted for AION Capital Partners Limited in the consortium; Final Resolution Plan approved by CoC with 98.97% majority voting share (09-10.04.2018)

3. Name

   JSW Steel Limited

   Stage reached

   approved

   Outcome note

   Consortium member throughout; Final Resolution Plan approved by CoC with 98.97% majority voting share (09-10.04.2018)

Bidding mechanism

negotiation

Clock events

1. Kind

   extension

   Days

   90

   Granted date

   2018-01-09

   Reason

   extension of the CIRP period by 90 days, pursuant to CoC decision at the meeting held 16.12.2017

Advisors

1. Role

   Registered Valuer

   Name

   RBSA Valuation Advisors LLP

   Note

   appointed 31.07.2017; presented liquidation value report at 5th CoC meeting (16.12.2017); liquidation value determined as ~Rs.2365 crore

2. Role

   Registered Valuer

   Name

   Knight Frank (India) Private Limited

   Note

   appointed 31.07.2017; presented liquidation value report at 5th CoC meeting (16.12.2017)

3. Role

   Transaction Advisor

   Name

   SBI Capital Markets Limited

   Note

   appointed at 2nd CoC meeting (13.09.2017); presented negotiated resolution plan terms to CoC at 7th meeting (23.02.2018)

4. Role

   Professional advisor

   Name

   Grant Thornton

   Note

   appointed by the Interim Resolution Professional; made a presentation to CoC on operations of the Corporate Debtor (30.11.2017)

5. Role

   Transaction auditor (special audit, s.43/45/50/66)

   Name

   Agrawal Anil & Co., Chartered Accountants (Mr. Anil Agrawal)

   Note

   presented special audit report on transactions under Sections 43, 45, 50 and 66 of the Code to CoC at 7th meeting (23.02.2018)

6. Role

   Feasibility/viability and bid-evaluation advisor

   Name

   RBSA Advisors

   Note

   opined the resolution plan is feasible and viable and reasonable for CoC to accept (report dated 27.03.2018)

Dissenting fc treatment

Dissenting Secured Financial Creditors: admitted claims 394,796,473, receive liquidation value of 91,239,814 as upfront cash payment, Nil debt-to-equity conversion (as printed). Dissenting Unsecured Financial Creditors: admitted claims 735,688,388, liquidation value Nil, receive Nil (as printed). Text states liquidation value due to unsecured financial creditors, operational creditors and other creditors as per the Section 53 waterfall is NIL since liquidation value is insufficient to satisfy even the admitted claims of secured financial creditors in full.

Section 30(2)(b) minimum stated

Yes

Business & treatment of stakeholders

Conversion of part debt (Rs.215.20 crore) into equity shares allotted to assenting financial creditors in proportion to admitted debt; reduction of share capital extinguishing the existing promoters' equity share capital and preference share capital, and proportionately reducing other shareholders' equity share capital to 33.06% of its original value; consolidation of the face value of shares from Rs.3.3 to Rs.10 per equity share, modified so as not to eliminate any retail shareholder (other than promoter shareholders) holding even 1 or 2 shares; merger of a newly incorporated Bidding Company ("Bid Co", wholly held by the Resolution Applicants) with and into the Corporate Debtor on the effective date

Capital reduction

Yes

Merger or amalgamation

Yes

Post plan shareholding

1. Holder

   Consortium (Resolution Applicants) - Equity shares

   After

   349,020,000 shares, 74.29% of equity share capital

2. Holder

   Others (including financial institutions and banks) - Equity shares

   After

   120,765,221 shares, 25.71% of equity share capital

3. Holder

   Total - Equity shares

   After

   469,785,221 shares, 100.00%

4. Holder

   CCPS held by Consortium post-merger

Effective date definition

The Effective Date as mentioned in the Resolution Plan, on which the Resolution Applicant proposes to acquire management and control of the Corporate Debtor by restructuring the company

Monitoring committee

Until the Corporate Debtor is acquired by the Resolution Applicants, it shall be managed and controlled by an Interim Board appointed by the Steering Committee approved by the CoC

1. Seq

   1

   Relief

   Approval of the Final Resolution Plan not to extinguish the rights of members of the CoC or the liability of existing promoters under personal guarantees/sureties/indemnities in favour of CoC members (prayer b)

   Category

   guarantees

   Disposition

   granted

   Reason

   financial creditors and other creditors will continue to be entitled to enforce their rights against the existing promoters of the Corporate Debtor, and the existing promoters will continue to be liable in relation to any pending litigation against them

2. Seq

   2

   Relief

   Exemption from payment of stamp duty on actions under the Resolution Plan, or alternatively deeming the approval order as one sanctioning a reconstruction/amalgamation for stamp duty purposes (prayers c and d)

   Category

   stamp_duty

   Disposition

   declined

   Reason

   there is no express provision conferring powers upon this Bench to exempt levying of stamp duty on the reconstruction and amalgamation proposed in the scheme

3. Seq

   3

   Relief

   Exemption from approvals required from SEBI

   Category

   licences_approvals

   Disposition

   declined

   Reason

   whatever approvals are required to be taken as per law by the Corporate Debtor shall be taken by the company; no blanket exemption can be given by this Bench in respect of compliance of law

4. Seq

   4

   Relief

   Inclusion of Gare Palma IV/7 (and other) mine rights as part of the Resolution Plan

   Category

   other

   Disposition

   declined

   Reason

   this Bench, in a detailed order dated 16.01.2018, held that these mine rights have not been conferred upon the Corporate Debtor and this mine should not have been made part of the Resolution Plan; the Central Government will independently decide the mine leasing/licensing rights

5. Seq

   5

   Relief

   Slump sale of 100% shares of a newly incorporated subsidiary ("Newco") holding non-core assets, at fair market value, to a person not disqualified under Section 29A

   Category

   other

   Disposition

   declined

   Reason

   on the Bench raising doubts about the Resolution Applicant immediately selling Corporate Debtor property at fair market value, the Resolution Applicant's Counsel gave an undertaking not to sell any non-core assets as part of this plan; the slump sale proposal is accordingly not approved

6. Seq

   6

   Relief

   Consolidation of face value of shares from Rs.3.3 to Rs.10 per equity share

   Category

   other

   Disposition

   conditional

   Reason

   Bench raised an objection that consolidation would eliminate retail shareholders holding 1, 2 or 3 shares; Resolution Applicant filed an affidavit agreeing not to eliminate any shareholder (other than promoter shareholders); consolidation approved as modified, with the Resolution Applicant directed not to eliminate any retail shareholder

7. Seq

   7

   Relief

   Exemption from future statutory tax/government dues

   Category

   tax

   Disposition

   declined

   Reason

   the Resolution Applicant is bound to pay all taxes and other government dues from the date this plan comes into effect; this plan will not become an exemption to the company from paying taxes to the government

1. Objector

   ICICI Bank Limited

   Objector class

   financial_creditor

   Ground

   Sought a stay on the CoC meeting scheduled to be held on 31.03.2018

   Ia number

   Miscellaneous Application No. 223 of 2018

   Disposition

   allowed

   Effect on approval

   Stay on the CoC meeting granted by order dated 27.03.2018; the same order was vacated on 04.04.2018 and admission of claims filed by ICICI Bank, IFCI and Standard Chartered was directed; the eighth CoC meeting (approving the plan for adoption) proceeded thereafter on 07.04.2018

2. Objector

   Bench (NCLT)

   Objector class

   bench_itself

   Ground

   Doubted the Resolution Applicant's proposal to immediately sell Corporate Debtor's non-core assets at fair market value via slump sale to a Newco

   Disposition

   allowed

   Effect on approval

   Resolution Applicant's Counsel gave an undertaking not to sell any non-core assets as part of the plan; the slump sale proposal was not approved by the Bench

3. Objector

   Bench (NCLT)

   Objector class

   bench_itself

   Ground

   Objected to consolidation of face value of shares from Rs.3.3 to Rs.10 per share, which would eliminate retail shareholders holding 1, 2 or 3 shares

   Disposition

   partly_allowed

   Effect on approval

   Resolution Applicant filed an affidavit agreeing not to eliminate any shareholder other than promoter shareholders; the Bench modified the consolidation sought and approved it as modified

4. Objector

   Bench (NCLT)

   Objector class

   bench_itself

   Ground

   Gare Palma IV/7 mine rights included in the Resolution Plan despite the Bench's own prior detailed order dated 16.01.2018 holding these rights not conferred on the Corporate Debtor

   Disposition

   allowed

   Effect on approval

   Plan not approved in relation to any of the mines mentioned in the plan

Transaction audit findings

SBI's empanelled firm (engaged for concurrent audit) was also engaged to prepare a detailed report of the company's transactions under Sections 43, 45, 50 and 66 of the Code (informed to CoC at 4th meeting, 30.11.2017). A special audit report on such transactions was prepared by Agrawal Anil & Co., Chartered Accountants, and presented to and discussed by the CoC at its 7th meeting (23.02.2018).

Conditions imposed

1. Condition

   Upfront cash payment to secured financial creditors to be made within 30 days from the date of this order, as stated in the Letter of Intent

   Addressed to

   Resolution Applicant

2. Condition

   Payment of Rs.25 crores to operational creditors (other than employees/workmen) within one year from the date of this order (24.07.2018), on a pro rata, pari passu basis

   Addressed to

   Resolution Applicant

3. Condition

   Resolution Applicant shall not eliminate any retail shareholder holding even 1 or 2 shares, other than promoter shareholders, in the share consolidation

   Addressed to

   Resolution Applicant

4. Condition

   Resolution Applicant shall not sell any of the non-core assets as part of this plan

   Addressed to

   Resolution Applicant

5. Condition

   Plan not approved in relation to Gare Palma IV/7 or any other mines mentioned in the plan

   Addressed to

   Resolution Applicant

6. Condition

   Resolution Applicant bound to pay all taxes and government dues from the date the plan comes into effect

   Addressed to

   Resolution Applicant

Approval conditional on external order

Yes

External order ref

This Bench's own detailed order dated 16.01.2018 holding that Gare Palma IV/7 mine rights have not been conferred upon the Corporate Debtor; Central Government to independently decide mine leasing/licensing rights

Judicial observations

1. "Having regard to valuation of the assets of the Corporate Debtor company, we have noticed that the fair valuation of the company is almost double to the liquidation value given to the Corporate Debtor... though difference between fair value and liquidation value is more than two thousand crores rupees, this Bench, considering the submissions of the Counsel appearing on behalf of the COC and looking at the compliance of Section 30(2) of the Code, approved this Resolution plan." (para.6)
2. "As to Gare Palma IV/7 mine rights, this Bench having held in a detailed order dated 16.1.2018 that this mine rights have not been conferred upon the corporate debtor, this mine should not have been made as part of this Resolution Plan." (para.21)
3. "As to exemption sought by the Resolution Applicant in respect to approvals from SEBI, it is hereby clarified that whatever approvals required to be taken as per law by the Corporate Debtor, the same shall be taken by the company, no blanket exemption can be given by this Bench in respect to compliance of law." (para.20)

Companies named in the order

1. Monnet Ispat & Energy Limited

Order date

2018-07-24