JSW Steel has acquired majority stake in Ispat Industries.

The company on 21 December 2010 has acquired 41.29 per cent stake in Ispat Industries for Rs 2,157 crore. JSW is expected to fund the deal from internal accruals of Rs 3,000 crore and sanctioned loans which it had drawn from. The new entity will be named as JSW Ispat Steel and remain listed on the stock exchanges.

JSW is likely to pump in Rs 7,500 crore to refinance Ispat's debt, which stands at Rs 9,500 crore, including a working capital of Rs 2,000 crore.

Ispat Industries is likely to issue 108.66 crore fresh equity at Rs 19.85 a share on a preferential basis to JSW Steel which will then make an open offer to the minority shareholders of Ispat. After the issue of new shares, Ispat promoters' holding will be 26 per cent. JSW Steel and Ispat promoters' holding will be reduced to 39.9 per cent and 24.5 per cent once the banks convert part of their debt into equity.

Among the major banks, IDBI has lent Rs 3,000 crore, ICICI Bank Rs 1,800 crore, IFCI Rs 1,400 crore, SBI Rs 2,000 crore (working capital) and Rs 1,000 crore distributed among 8-10 banks. JSW Steel has agreed to repay the existing lenders in nine months and then obtain refinance at a lower rate of interest.

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JSW Steel seeks more land in Bellary (28-October-10)