Stemcor Restrained by Court on Planned Sale of Assets in India
Stemcor Holdings Ltd., seeking to sell its iron ore mine and pellet plant in India to repay about $1.2 billion of debt, was restrained by a court from putting the assets on the block.
The Calcutta High Court passed an order following a petition filed by ICICI Bank Ltd. (ICICIBC), which said the London-based steel trader’s Indian assets are part of collateral for a 5.87 billion rupee ($94 million) loan, according to an interim order published today on the court’s website. The next date of hearing is Oct. 7.
Stemcor, which failed to repay a $850 million credit line globally in May because of waning sales, won extra time from banks until December to reorganize its debt. A delay in selling the Indian business may jeopardize the plan and provoke action from lenders including ABN Amro Bank NV, HSBC Holdings Plc (HSBA) and Societe Generale SA.
“If the banks see that some progress has been made by December, the standstill may be extended,” said Giriraj Daga, an analyst at Mumbai-based Nirmal Bang Equities Pvt. “If they see the process has hit a wall, they might take over.”
ICICI Bank spokesman Sujit Ganguli didn’t respond to an e-mail seeking comment.
Closely held Stemcor owns the mine and the pellet plant through units Aryan Mining & Trading Corp. and Brahmani River Pellets Ltd., according to a company presentation. Stemcor also owns a slurry pipeline connecting the mine to the factory.
“This action was taken without any notification to the company and we were made aware of it last Friday evening,” Charles Armitstead, a London-based external spokesman for Stemcor, said in an e-mail. “Stemcor has every intention of complying with its contractual obligations, which is all the procedure asks us to do, and we believe that the matter will be resolved quickly.”
The mine, situated in the eastern state of Odisha, can produce 5 million metric tons of iron ore a year, while the pellet plant has an annual capacity of 4 million tons.
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