Kolkata, April 9 (IANS) Tata Steel’s subsidiary Tata Sponge Iron on Tuesday said it has completed the acquisition of steel business of debt-ridden Usha Martin Ltd (UML), though transfer of some assets including mines and certain land parcels is pending.
“This is to inform you that the Company has completed the acquisition of steel business undertaking including captive power plants, today (Tuesday) i.e. on April 9, 2019, pursuant to a cash consideration (after adjustment for negative working capital and debt like items) payable to UML of Rs 4,094 crore, which is subject to further hold backs of Rs 640 crore, pending transfer of some of the assets including mines and certain land parcels,” it said in a regulatory filing.
The steel giant, in September last year, had executed definitive agreements for the acquisition for a cash consideration between Rs 4,300-4,700 crore.
The transaction comprises the proposed acquisition of steel business undertaking of UML through slump sale on a going concern basis; which inter alia comprises the specialised 1 mtpa alloy based manufacturing capacity in long products segment based in Jamshedpur, a producing iron ore mine, a coal mine under development and captive power plants.
The UML on Tuesday said it has completed the sale of its steel business to Tata Sponge, except for transfer of an operative iron ore mine, a coal mine under development and some of the assets which would be transferred subsequently subject to fulfilment of certain conditions precedent contained in the business transfer agreement.
The Kolkata-based speciality steel maker UML makes alloy steel long products such as wire rods, bars, blooms and bright bars, mostly for commercial vehicles and tractors.
Usha Martin’s board had in June last year decided to explore the sale of its steelAbusiness and constituted a committee to appoint investment banks and consultants to help evaluate proposals and oversee the potential sale process.
It had decided to explore the sale of the steel unit mainly to reduce huge long-term debt.