Jindal Pipes has made a counter-offer to shareholders of Indian Seamless Metal Tubes against Kirloskar Ferrous Industries’ ₹477 crore offer..
Without giving details of the offer, sources close to Jindal Pipes said it has placed expression of interest for acquiring majority stake in ISMT, which will not only be better than KIFL but also be in the best interest of shareholders and lenders.
In November, Kirloskar Ferrous Industries said it will acquire 51.25 per cent equity stake in ISMT by investing ₹477 crore in the preferential shares and then provide unsecured loan of ₹194 crore. The deal triggered the mandatory 25 per cent open offer for shares from the public.
ISMT was to issue 15.4 crore preference shares to Kirloskar Ferrous Industries at ₹30.95 per share. As against this, Kirloskar will make an open offer at ₹31.84 per share. If the open offer is fully subscribed, Kirloskar Ferrous will have to make a payment of ₹240 crore.
However, in December, Jindal Pipes wrote a letter to the lenders stating that it is aware of the of ISMT’s debt and obligations to its lenders and is structuring its proposal to infuse requisite equity in ISMT in the most efficient manner possible.
Jindal Pipe’s offer will benefit ISMT lenders and creditors including operational and financial creditors besides the workmen. This apart, existing shareholders of ISMT will also benefit from JPL’s offer which will be better than the proposed transaction with KFIL, it said.
New offer
The new offer will be tailor-made and optimised for ISMT’s existing needs. Since JPL operates in the same space as ISMT, it is well positioned to understand the needs of the business, it added.
Avenue Capital-backed Asset Reconstruction Company of India and Edelweiss ARC acquired ISMT loan from banks. Lenders invited bids for their ₹3,359 crore outstanding loans soon after receiving a ₹670 crore non-binding offer from Kirloskar Ferrous. Rare ARC had submitted an expression of interest for acquiring the loan, but it did not submit a firm bid.
Since lenders failed to receive any firm bids, they accepted a ₹670 crore offer from Kirloskar. Now, the Expression of Interest submitted by Jindal Pipes has kicked off a new twist in ISMT sale.