Stock Report

Sunflag Iron & Steel Company gets Rs. 900 crore arbitration award

Posted On : 2022-04-23 20:49:29( TIMEZONE : IST )

An Arbitration Award was passed by the Sole Arbitrator Mr. Justice A.R. Joshi (Retd.) Former Judge, Bombay High Court, under the Arbitration and Conciliation Act, 1996 on 22nd April, 2022 in the matter of arbitration between Sunflag Iron & Steel Company Limited ("Sunflag") and Lloyds Metals and Energy Limited ("Company").

The matter in a nutshell is that the Company and Sunflag from the year 2004 have been entering into various understandings and contracts to have joint and equal control on the iron ore mine of the Company and sharing of the iron ore extracted in the ratio of 60% and 40% respectively. However, for reasons not attributable to both the parties the said arrangements could not take place and the mining operations could not be commenced. During this period Sunflag had advanced funds to the Company towards the operation and commencement of the mine. In the year 2016, the Company started mining operations with minimal production; however, the Company could not share the iron ore extracted with Sunflag for various reasons.

The Company and Sunflag were engaged in discussions to resolve the issue amicably but the same could not be resolved. Sunflag then invoked the arbitration clause as provided in documents and initiated arbitration proceedings.

After hearing the arguments of both the parties, the learned Arbitrator has passed an award on 22nd April, 2022. The gist of the award is as follows:

The Company is liable to pay Rs. 900 crores to Sunflag (i.e., Rs. 312 crores on account of refund of advance along with accrued interest and the balance Rs. 588 crores as full settlement of all other claims).

Given the amount being large, the Company proposed to settle the said liability, subject to approval of shareholders and in accordance with applicable laws, by issuing six crores (6,00,00,000) Zero interest Optionally Fully Convertible Debentures ("OFCD") which will settle entire liability on the basis of proposed issue price of Rs. 150/- (Rupees One Hundred and Fifty only).

The OFCD would be converted not before 9 months but, not later than 18 months at a conversion ratio of 1:1.

This proposal has also been agreed by Sunflag and the company shall commence the process of the proposed issuance of OFCDs and obtain necessary approvals and compliances with respect to the same.

Shares of LLOYDS METALS AND ENERGY LTD. was last trading in BSE at Rs. 201.10 as compared to the previous close of Rs. 211.65. The total number of shares traded during the day was 65057 in over 631 trades.

The stock hit an intraday high of Rs. 201.10 and intraday low of 201.10. The net turnover during the day was Rs. 13082962.00.

Shares of Sunflag Iron And Steel Company Limited was last trading in BSE at Rs. 128.20 as compared to the previous close of Rs. 124.70. The total number of shares traded during the day was 425202 in over 7308 trades.

The stock hit an intraday high of Rs. 129.95 and intraday low of 120.45. The net turnover during the day was Rs. 53636006.00.