New Delhi: Debt-laden Essar Steel on Tuesday said its promoters have assured the Joint Lenders Forum (JLF) that they will infuse additional funds in the firm to support its operations and "improve capital structure".
The embattled firm, which met its lenders last week, also assured the banks that it is still searching for a strategic investor and the process is in early stages and may take 6-12 months.
During the meeting with lenders, Essar Steel apprised banks of significant improvement in its all-round performance, the firm said in a statement.
The meeting also discussed the issue of restructuring of its debt with the JLF that Essar Steel had sought, along with other options, which included the company's continued efforts to bring in a strategic investor/partner, it added.
"The promoters of the company reiterated their commitment to infuse additional funds to support the company's operations and improve the capital structure, while emphasising that no further funding was required," Essar Steel said.
Essar Steel had previously said that its promoters will infuse Rs 1,500 crore in consultation with the lenders.
However, a banker on the condition of anonymity said the firm might also convert some of its loan into equity.
The Ruia's-promoted firm -- part of the oil-to-steel Essar Group -- has a net debt of Rs 38,000 crore, of which Rs 30,000 crore is long-term loan and the remaining is working capital.
Sources said that JSW Steel and Tata Steel were approached for acquiring stake in Essar Steel around January.
On the issue, the firm said: "Essar Steel had appointed ICICI Securities and SBI Capital Markets as advisors to induct strategic partner. We had started this process. The process is at an early stage therefore we would not like to comment on speculation."
On the timeframe, the firm said it will take 6 to 12 months.
The company added that Indian Steel Alliance representing the India steel producers has approached the government for a financial package, which is in line with the requirements of the steel industry.
Essar Steel representatives said the firm's performance was impacted during the last three years due to several external factors that were beyond its control, particularly the cancellation of committed natural gas allocation by government that forms the main feedstock for steelmaking.
"However, the company reiterated that these challenges have been resolved and the company is witnessing significant improvement in its performance," it added.
The Mumbai-based company said it has already paid lenders over Rs 20,000 crore in the last three-and-a-half years by way of interest and principal repayments with promoters infusing Rs 9,000 crore and the balance coming through EBIDTA.