Tata Steel had apparently signed an agreement in September 2018 for taking over the steel unit from Usha Martin
Tata Sponge has recently confirmed that it has finally completed the acquisition of the steel business undertaking of Usha Martin Ltd. The completion of the deal was reportedly pursuant to Rs. 4,094 crore in cash consideration, payable to Usha Martin after adjustments are made for debt like items and negative working capital.
According to Tata Sponge’s official notification to exchanges, pending the transfer of some assets like mines and specific land parcels, there would be further hold backs of Rs. 640 crore.
Sources familiar with the matter said Tata Sponge has been selected by Tata Steel as a vehicle to acquire Usha Martin’s steel division. Tata Steel had apparently signed an agreement in September 2018 for taking over the steel unit from Usha Martin.
Records show that on 24 October 2018, Tata Sponge had confirmed to the exchanges that its board of directors have made a decision to acquire Usha Martins steel division through a slump sale on a going concern basis.
The amount to be paid for the deal would be deposited in an escrow account with the SBI and will be used for repaying the debt of Usha Martin, sources mentioned, and the money will go directly to Usha Martin’s lenders when it comes in.
The remaining amount of nearly Rs. 640 crore would be received after the coal and iron ore mines as well as a land parcel measuring close to 75 acres is transferred to Tata Sponge, sources added.
Usha Martin has supposedly received the approval for transferring the assets from the government of Jharkhand. Under this divestment move, all employees associated with the steel business of Usha Martin would also be transferred to the Tata group. The transaction would also add to the automotive steels portfolio of Tata Steel, which the company had recently bolstered by acquiring Bhushan Steel.