Calcutta: Lenders to Monnet Ispat and Energy Ltd have approved the resolution plan submitted by JSW Steel & AION Investment Pvt Ltd with an overwhelming majority, bringing the bankrupt company closer to revival.

The Rs 3,750-crore deal includes a Rs 2,750-crore upfront payment to the creditors who will take a 76 per cent haircut on the outstanding admitted claim of about Rs 11,500 crore.

In a statement to the stock exchanges on Tuesday, Monnet Ispat (MIEL) said the committee of creditors has approved the resolution plan by a 98.7 per cent majority through an e-voting process.

Under the proposed deal, JSW will advance working capital of Rs 125 crore and put in another Rs 389 crore via equity infusion. There will also be an issuance of convertible preference shares of Rs 280 crore and quasi equity of Rs 250 crore.

MIEL is the flagship company of the Monnet group, promoted by Sandeep Jajodia, having an integrated steel plant with a capacity of 1.5 million tonnes at Raigarh in Chhattisgarh. The facility includes the production of hot rolled coil plates, rebars and structure profiles, apart from a sponge iron unit with a capacity of one lakh tonnes per annum.

Monnet is one of the five steel makers among the first lot of 12 heavily indebted stressed companies that were referred to the National Company Law Tribunal for corporate insolvency resolution at the behest of the Reserve Bank of India.

In similar resolution proceedings, Tata Steel had been declared the highest bidder for Bhushan Steel, while Vedanta had been chosen as the top bidder for Electrosteel Steels. However, both the decisions had been challenged on the grounds that the Tatas and Vedanta should be deemed ineligible for bidding under section 29A of the Insolvency & Bankruptcy Code.

The resolution professionals of Bhushan Steel on Tuesday rejected the arguments of the employees of the firm before the NCLT that Tata Steel was not eligible to bid.

The Monnet deal is likely to close by this weekend and the letter of intent will be issued soon. The resolution plan of JSW-AION will be placed before NCLT for formal approval, sources said.

The JSW-led consortium was the only bidder for Monnet. Sajjan Jindal's JSW had also bid for Bhushan Steel and Bhushan Steel and Power, which have much bigger steel-making assets.

In both the cases, Tata Steel emerged as the winner.<>The Monnet Ispat scrip closed at Rs 23.05, up 4.54 per cent, on the BSE after the JSW announcement on Tuesday.

As on March 31, 2017, local banks had a bad-debt exposure of Rs 5,000 crore or more in each of these companies.