Vedanta group, controlled by Anil Agarwal, has won the bid to acquire troubled Electrosteel Steels Ltd through an insolvency process under the bankruptcy code. While Vedanta didn’t reveal the cost of acquisition, market sources said the offer is likely to be around Rs 5,000 crore for the bankrupt steel firm which owes lenders close to Rs 11,300 crore.
“Vedanta Ltd hereby informs that it has been declared as the successful resolution applicant by the committee of creditors (CoC) for Electrosteel Steels Ltd under the Corporate Insolvency Resolution Process of the Insolvency and Bankruptcy Code, 2016 and has received a Letter of Intent (LoI) today (on Saturday),” the company said in a BSE filing.
Vedanta said it has accepted the terms of the LoI. The closure of the transaction will be subject to compliance with applicable regulatory requirements and as per the final terms approved by the National Company Law Tribunal, it said.
Sources said objections from Renaissance Steel, which had questioned Vedanta’s eligibility to bid, had been overruled. This is the second closure following Tata Steel’s winning bid for Bhushan Steel.
The resolution professional had received bids from Vedanta, Edelweiss Alternative Asset Advisors, Tata Steel and Renaissance Steel in January this year. On July 21 last year, the NCLT had admitted State Bank of India’s (SBI) insolvency petition against Kolkata-based Electrosteel Steels. The company was referred to the bankruptcy court under Section 7 of the IBC following a nudge from the Reserve Bank of India. The 270-day deadline for insolvency resolution process completion will expire on April 17.
Earlier on Monday, the Kolkata bench of the NCLT had asked Electrosteel’s resolution professional (RP), Dhaivat Anjaria, a partner at PwC, to convene the CoC meet as early as possible. On March 20, the Kolkata bench of the NCLT had directed the RP to place all the objections of Renaissance Steel against Vedanta and Tata Steel before the CoC for an “independent consideration” of the committee. This was after Abhishek Dalmia-led Renaissance Steel moved the tribunal asking it to prevent Anjaria from proceeding with further negotiations with Vedanta, the highest bidder, till the issue of eligibility of the Anil Agarwal-led company and Tata Steel was determined.
Renaissance Steel had alleged that resolution applicants Vedanta and Tata Steel were not eligible to bid for the Kolkata-based insolvent steel maker according to Section 29A of the Insolvency and Bankruptcy Code.