Written by Shamik Paul
ArcelorMittal, a VTB Bank-led Numetal-JSW Steel consortium and Vedanta have bid for the bankrupt Essar Steel, as the deadline for the second round of bids expired on Monday.
ArcelorMittal has teamed up with Nippon Steel & Sumitomo Metal Corporation (NSSMC) in its attempt to get control of Essar Steel. The two will jointly acquire and manage the Indian steel firm. Anil Agarwal-promoted Vedanta, which is likely to get control of the Kolkata-based Electrosteel Steels, having been declared the highest bidder, was an entrant in the fray. The Sajjan Jindal-led JSW Steel, which did not bid for Essar Steel in the first round, confirmed it was partnering Numetal Steel.
According to bankers, the bids could not be opened before April 4 as directed by the National Company Law Tribunal (NCLT) and were with the resolution professional (RP). Data on Essar Steel’s website show financial creditors had claimed Rs 54,857.22 crore, while claims worth Rs 49,212.56 crore were admitted by the NCLT as on February 23, 2018.
Persons familiar with the bidding process explained since it had not submitted an expression of interest (EoI) in October 2017, JSW Steel would be eligible to bid for the stressed steelmaker only if it partnered another eligible bidder. Having lost out to Tata Steel in the race for Bhushan Steel, JSW Steel would be keen to get control of Essar Steel, analysts opined.
ArcelorMittal is believed to have paid almost Rs 3,000 crore to Uttam Galva to help it settle its dues with lenders, to ensure it is eligible to participate in the purchase process for Essar Steel, under the rules of the Insolvency and Bankruptcy Code (IBC). It is not clear, however, whether the NCLT will accept ArcelorMittal is eligible. VTB Bank is understood to have bought the stake of Aurora Enterprises in Numetal, to dissociate itself from Rewant Ruia, a relative of the Ruia family which set up Essar Steel.
The initial bids by Arcelor Mittal and Numetal were disqualified in the context of the amendment to the Insolvency and Bankruptcy Code (IBC), which categorically states that promoters of defaulting companies cannot bid unless they repay all the outstanding loans before submitting their resolution plan. FE