JSW Steel Outbid Tata Steel to Acquire Ispat Industries

JSW Steel on 21 December 2010 acquired 41.29 per cent stake in loss-making Ispat Industries for Rs 2157 crore. JSW outdid Tata Steel and the world's largest steelmaker ArcelorMittal to make the acquisition. JSW proposed to infuse Rs 7500 crore to refinance Ispat's debt that stands at Rs 9500 crore, including a working capital of Rs 2000 crore. Ispat Industries decided to issue 108.66 crore fresh equity at Rs 19.85 a share on a preferential basis to JSW. JSW following the issue of shares will make an open offer to the minority shareholders of Ispat. After the issue of new shares, Ispat promoters' holding will stand at 26 per cent. JSW Steel and Ispat promoters' holding will dip to 39.9 per cent and 24.5 per cent once the banks convert part of their debt into equity. JSW Steel agreed to repay the existing lenders in nine months and then obtain refinance at a lower rate of interest.