Deal Closed | Carval Investors Pte Limited | Resolution Plan for Uttam Galva Metallics Limited & Uttam Value Steels Limited

The details of the deal are as follows:

Sector: Distressed M&A, Restructuring & Insolvency, Private Credit and Private Equity 

Announcement Date: 29 December 2020  

Completion Date: 29 December 2020  

Name of Client: Carval Investors Pte Limited 

CarVal Investors is an established global alternative investment manager focused on distressed and credit-intensive assets and market inefficiencies. Today, CarVal Investors has approximately $10 billion in assets under management in corporate securities, loan portfolios, structured credit and hard assets. 

Deal Description: The transaction involved us assisting and advising Carval Investors Pte Limited (CarVal), the Singapore arm of Carval Investors LP which is an investment fund with global interests across countries and sectors, in the implementation of the NCLT approved resolution plans for Uttam Galva Metallics Limited (UGML) and Uttam Value Steels Limited (UVSL). CarVal and Nithia Capital were resolution applicants in this process.  

The Firm was involved with all aspects of the implementation and closing of the transaction including restructuring & insolvency, private credit and private equity aspects of this first of a kind transaction.  

Total Consideration: USD 250 million  

Team Members: The transaction team consisted of Ashwin Bishnoi (Partner), Shruti Singh (Partner), Aayushi Anand (Principal Associate), Shriya Nayyar (Senior Associate), Farhan Shehab Umar (Associate), Amrit Mahal (Associate), Chintan Aashwini (Associate) and Kartikey Gautam (Associate). 

The private equity aspects were advised on by Kartick Maheswari (Partner), Shantanu Gupta (Partner), Nayantara Kutty (Principal Associate), Reshma Abraham (Associate) and Virali Nagda (Associate). 

Certain tax-related queries raised by CarVal were advised on by Indruj Rai (Partner) while certain employment law-related queries were advised on by Anshul Prakash (Partner) and Deepak Kumar (Principal Associate). 

Role of Firm: To assist with the implementation of the Resolution Plan submitted by the Carval entities, Nithia and Mr Jai Saraf for both UGML as well as UVSL. This involved the negotiation and finalization of all transaction documents between the CarVal entities, UGML, UVSL, the two committees of creditors and inter-se arrangement agreements between the CarVal entities and Nithia. 

The transaction involved the issuance of approximately INR 1200 crores of debt to the financial creditors of UGML and UVSL and approximately INR 625 crores to the CarVal entities as critical rescue capital for UGML and UVSL, in addition to the equity infusions by Nithia and the CarVal entities in UGML and UVSL via a jointly held offshore entity.  

Other legal advisors if any with names of Lead Lawyers: Given the number of stakeholders involved, there were several counsels involved: 

• Khaitan & Co, for the CarVal entities; 
• Cyril Amarchand Mangaldas, for Nithia Capital Resources Advisors LLP and Mr Jai Saraf; 
• Shardul Amarchand Mangaldas & Co, for the committee of creditors for each of UGML and UVSL; 
• J. Sagar Associates, as counsel for the monitoring agencies for each of UGML and UVSL;  
• Juris Corp, for Omkara Assets Reconstruction Private Limited as the acquirer of distressed debt;  
• Kirkland & Ellis LLP, for Carval Investors Pte Limited on the offshore aspects of the transaction; and 
• Rosenblatt & Company, for Nithia Capital Resources Advisors LLP and Mr Jai Saraf on the offshore aspects of the transaction. 

Unique Feature of Transaction: There are several unique features in this transaction. Principally, this is the first time that private equity investors have utilized the mechanism of India’s new bankruptcy code to restructure two distressed targets at the same time and that too during the COVID-19 pandemic. It is a confidence fillip to the IBC and its applicability even during trying times. It is also the first time that an asset reconstruction company (ARC) has successfully participated in closing a resolution plan after the RBI clarified the role that ARCs can play in a resolution plan. This transaction paves the way forward for ARCs playing such a role on other rescues as well.