Lenders for Essar Steel India Ltd., the biggest steel mill on the block under India’s new bankruptcy law, have selected ArcelorMittal as the preferred bidder for the asset, bringing the world’s largest steel maker a step closer to gaining a foothold in India’s growing market for the alloy.
Arcelor, controlled by billionaire Lakshmi Mittal, will now begin final negotiations with creditors, the Luxembourg-based producer said in a statement. The move by lenders comes after Arcelor on Wednesday agreed to clear about 74.69 billion rupees ($1 billion) in outstanding dues of two of its group companies to become eligible to bid for Essar.
The battle for the 10-million-metric-tons-a-year steel asset has been one of the most hotly contested under the nation’s insolvency resolution process. Essar Steel “represents a unique and compelling opportunity” for Arcelor to establish a significant footprint in a fast growing market that’s poised to become the second-biggest producer of the alloy, Arcelor had said in another statement earlier this week.
India’s Supreme Court had given Arcelor and a rival bidder Numetal Ltd. a deadline of two weeks that expired Thursday to pay off dues in group companies. VTB Capital-led Numetal had failed to pay their dues by the deadline, paving the way for Arcelor to be declared as the preferred bidder.
ArcelorMittal and Numetal had both offered to pay 420 billion rupees for the mill. India’s Supreme Court had given Essar’s lenders eight weeks to choose the best bid once the dues are cleared. Billionaire Anil Agarwal’s Vedanta Ltd. And JSW Steel Ltd. had also expressed interest to buy the mill.
However, legal challenges by other bidders such as Russia’s VTB Capital could pose risks to any potential deal.