Visa Steel Ltd (VSL) has closed the Rs 368-crore ($67-million) transaction with SunCoke Energy Inc of the US for 49 per cent stake in Visa Coke Ltd (VCL).

Sealing of the deal meant completion of payment (in rupee terms) by SunCoke, transfer of shares and equal representation of SunCoke on the VCL board.

The six-member board of VCL met on Monday to formalise the appointment of the two executive directors — one each from both the partners.

Technology, scale-up

VSL has obtained approval of the lenders as well as shareholders for the joint venture proposal.

Vishal Agarwal, VSL Vice-Chairman & MD, told Business Line the deal with NYSE-listed SunCoke was formalised on Monday.

Visa Coke, with a 4 lakh tonnes-a-year heat recovery coke plant and steam generation units, has been carved out of Visa Steel’s Kalinganagar 3 lakh tonnes a year sponge iron project in Odisha.

The Kalinganagar coke unit is located on 25 acres and the sponge iron and steel project covers an area of 500 acres.

SunCoke envisaged that the capacity of the joint venture in next three to five years could go up to 1.5 to 2 million tonnes a year, said M.J. Thomson, president and CEO of SunCoke. This collaboration is also significant for the extension of the stamp charging process in use at the unit, but not used by SunCoke. The money from the deal will help Visa Coke lower its debt.

Consortium

A significant part of the deal consideration will be used to reduce Visa’s long-term as well as working capital borrowings, which stand around Rs 2,000 crore.

The transaction, structured by KPMG, brings in Rs 355 crore to Visa Coke and the rest will go to VCL’s equity.

In September a corporate debt restructuring package was approved, under which Visa Coke got an initial two-year moratorium and an extended term of repayment for the next eight years.

A consortium of 18 banks, led by SBI, forms the lending group. The debt package also brought down interest rate by 300 basis points, Agarwal said.

The VSL stock on Monday ended 1.14 per cent down at Rs 43.50 on the BSE.

jayanta.mallick@thehindu.co.in

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