Edelweiss buys Rs 1,000-crore Axis Bank loans of Essar Steel

Edelweiss ARC, country's largest asset reconstruction company, has bought around Rs 1,000 crore of Essar Steel loans of Axis Bank at around 45% discount, according to market sources.

"Axis Bank has sold around Rs 1,000 crore of its exposure in troubled Essar Steel to Edelweiss ARC at a valuation of 55%," a source told PTI here today.

Essar Steel is saddled with Rs 44,000 crore debt from a consortium of 20 lenders which includes State Bank of India, Punjab National Bank and IDBI Bank, which is classified as distressed for some time now.

When contacted an Essar Steel official said if there is such a development it is between the bank and the ARC, and the company is not involved, while Edelweiss ARC chief Siby Anthony refused to comment.

The Ruais-promoted company, which was taken private last year, is in talks with bankers to restructure the loan under the recently initiated S4A scheme, which will allow the company to draw working capital loans.

Axis Bank is the fourth bank to sell loans of Essar Steel. Earlier HDFC Bank, ICICI Bank and Federal Bank had sold their exposure in the company Edelweiss ARC.

Last month there were reports of Singapore-based private equity firm SSG Capital, which controls Asset Care and Reconstruction Enterprise (ACRE) offering to buy banks' exposure in the steelmaker.

The lenders, however, decided to recast Essar Steel loans rather than taking a haircut.
Recently Essar Steel had asked banks to convert Rs 12,200 crore of loans into preference capital and equity shares.

The country's largest Edelweiss ARC, which has around Rs 30,000 crore in assets under management, has sold 20% stake to the largest North American pension fund Caisse de depot et placement du Quebec (CDPQ).

The Canadian fund also signed a long-term agreement to invest USD 600-700 million (Rs 5,000 crore) over the next four years in stressed assets and private debt opportunities out of which USd 300 million will be pumped in immediately. CDPQ already has around USD 1.5 billion invested in various domestic companies.