Monnet makes open offer for Orissa Sponge

Mount Everest Trading & Investment Limited (“MTIL”), an associate company of Monnet Ispat & Energy Limited and part of the Monnet Group (“Monnet Group”) promoted by Mr. Sandeep Jajodia, and Torsteel Research Foundation in India and its associates (“TRFI”) promoted by Dr. P. K. Mohanty, have entered into definitive agreements to form a strategic partnership in Orissa Sponge and Iron Limited (“OSIL”) (“Strategic Partnership”) on February 24, 2009 (“Proposed Transaction”).

The Proposed Transaction envisages a partial sale of equity by TRFI to the Monnet Group. MTIL, with Monnet Ispat and TRFI as PACs, has made a mandatory public announcement on February 25, 2009, for a tender offer to the public shareholders of OSIL. The Proposed Transaction shall be consummated upon compliance with all provisions of the SEBI Takeover Code.

As per the Proposed Transaction, Monnet Group and TRFI shall together hold in excess of 50% in OSIL and shall have proportionate representation on the board of OSIL. It is a Strategic Partnership of shared vision and idealism for enhancing shareholders’ value. It is expected to substantially benefit OSIL and its shareholders with, Monnet Group’s substantial expertise in sponge iron and steel production and coal mining, OSIL’s iron ore and coal resources and TRFI’s existing expertise and knowhow in sponge iron manufacturing technology. The partners intend to formulate and execute a strategic plan, over the medium term, for the development of OSIL into an integrated steel producer with a capacity in excess of 1 million tones of steel in the first phase.

Monnet Group is the second largest coal based sponge iron producer in India and also engaged in manufacturing of steel and ferro alloys backed by captive resources i.e. coal, iron ore and captive power. The current operational manufacturing capacity of Monnet Group includes 800,000 tonnes of sponge iron, 500,000 tonnes of steel products and 150 MW of captive power in Chhatisgarh.

The Monnet Group is already committed to the state of Orissa and is investing in excess of Rs 4,000 crores in the first phase which includes 1,050 MW coal based power plant in Angul, Orissa.

TRFI is current promoter of OSIL and is also involved in research, development and consultancy activities in iron and steel industry and the civil engineering sector. They pioneered the introduction of high strength rebars under the trademark “Tor” in the early 1970s and through OSIL, developed the “OSIL Process” – a pioneering effort in coal based sponge iron technology in the early 1980s.

Macquarie Capital Advisors is the sole and exclusive financial advisor to the Proposed Transaction and ICICI Securities is the merchant banker for the open offer. Khaitan & Co and Desai Dewanji were the legal advisor to TRFI and Monnet Group respectively.