Taking another step closer to insolvency resolution, Electrosteel Steels Ltd (ESL) has allotted 740 crore equity shares worth ₹7,400 crore on a preferential basis to 26 lenders.

Under the resolution plan submitted by billionaire Anil Agarwal-owned Vedanta, this will ensure that the ₹7,400-crore loan is converted into equity. Earlier this week, Vedanta deposited ₹5,320 crore in ESL’s escrow account.

Of the overall preferential equity shares allotment, State Bank of India will get the maximum allotment of 271,61,79,203 equity shares.

“The company has allotted 7,399,132,055 equity shares of ₹10 each on a preferential/private placement basis to financial creditors... pursuant to conversion of loan equivalent to ₹73,991,320,550” in terms of the Resolution Plan approved by the National Company Law Tribunal, ESL said in a filing on Wednesday.

In March, Vedanta was declared the successful resolution applicant by the committee of creditors for ESL, which has outstanding dues of ₹14,177 crore. According to the resolution plan, Vedanta Star, the wholly-owned subsidiary of Vedanta, will own 90 per cent stake in ESL. Investment from Vedanta in ESL will come in combination of ₹1,765 crore as equity and ₹3,555 crore as inter-corporate loans.

However, on May 30, a two-member NCLAT bench said that Vedanta’s payment would be subject to the outcome of the petition filed by Renaissance Steel, which has questioned Vedanta’s eligibility to bid for ESL.

Reserving its order on appellate Renaissance Steel’s petition, NCLAT said that if Renaissance Steel wins the case, the CoC will have to return the money to Vedanta.

Shares of Vedanta, whose copper plant at Thoothukudi in Tamil Nadu was closed recently, were down marginally at ₹246, and those of ESL were down 4 per cent at ₹1.08 on Wednesday.

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