The battle for the controlling stake of Orissa Sponge Iron intensified on Wednesday with Delhi-based Monnet Ispat group, through its associate company Mount Everest Trading & Investment, announcing the restructuring of the board of the Orissa-based steel firm.

The Monnet group, which has already acquired 27 per cent in Orissa Sponge from its promoter P K Mohanty at Rs 283 per share, made an open offer on Wednesday for another 20 per cent at Rs 310 per share.

Announcing the open offer, Monnet group executive vice-chairman and managing director Sandeep Jajodia said, "The Monnet group has formed a joint venture with Orissa Sponge existing promoter P K Mohanty. Under the deal, the Monnet group will have three directors, while Mohanty, who will have around 18 per cent stake in the company, will have two nominees on the board."

While two open offers, including Monnet's, for the Orissa steel company have already been announced, the third is on its way. According to sources, Neeraj Singhal-controlled Bhushan Steel [Get Quote], which had acquired around 22 per cent in Orissa Sponge, is slated to make an open offer before February 28. This one is expected to be at a marginal premium to the Monnet offer price.

In fact, Bhushan Power, controlled by Sanjay Singhal, the elder brother of Neeraj Singhal, was the first to set the stage for this corporate battle. Without acquiring any share of Orissa Sponge, it made an offer to acquire 26 per cent in the steel company at Rs 300 per share, on February 7, thereby triggering the takeover code. Now, every other bidder will have to follow the deadline set by Sanjay Singhal.

Industry sources said that Bhushan Steel, which has officially disclosed that it has acquired 14.8 per cent stake in Orissa Sponge, is actually holding much above the threshold level of 26 per cent through its 'friends.' "Once the open offer closes and warrants were converted, Bhushan Steel, is confident to have more than 30 per cent stake in the company and becoming the single largest shareholder," sources said.

While Bhushan Power is unlikely to revise its bid, sources said that Bhushan Steel and Monnet Ispat will be at loggerheads since both will own above 26 per cent stake in Orissa Steel. "In that situation, without the consent of both the parties (Monnet Ispat and Bhushan Steel), Orissa Sponge, which is in the midst of Rs 800 crore (Rs 8 billion) expansion plan, would not be able to pass any special resolution such as raising funds through equity routes."

However, Jajodia said that the company did not need any special resolution, "As the company does not have any major fund requirement in immediate future." The company has already tied up funds with banks and other sources, he added.