When the battle for 10 million tonne (MT) Essar Steel goes back to square one, with a re-bid deadline of April 2, the same ‘ineligible bidders’ plan to make a comeback with new bids for acquisition. ArcelorMittal, one of the two bidders who had submitted the bid in the first round, says it doesn’t mind fresh bids. However, the second bidder Numetal Mauritius is still figuring out its plans to meet the qualification criteria.
The industry experts expect that the competition for Essar Steel will mainly play out between these two again. In addition to these two, there were three more companies, Vedanta Resources, Tata Steel and Nippon Steel, who had submitted expressions of interests (EoIs) for Essar Steel.
Anil Agarwal, chairman of Vedanta, had said earlier that his company is not keen to bid for Essar as they are not in the steel sector. Tata Steel already has a lot on its plate after it emerged as the highest bidder for Bhushan Steel and Bhushan Power & Steel. The combined offer value of these two bids comes to around Rs 59,000 crore, when Tata Steel owes Rs 83,000 crore of consolidated debt. In addition, the steelmaker has Rs 23,500 crore worth of expansion plan for Kalinganagar plant on cards. Japan’s Nippon Steel has signed a joint venture (JV) formation agreement with ArcelorMittal, along with Sumitomo Metal Corporation (NSSMC), to acquire and manage Essar Steel.
Essar Steel is undergoing bankruptcy proceedings after failing to repay its loans totaling Rs 45,000 crore to lenders. According to bankers, only the applicants who had initially submitted EOIs would be eligible to bid in the second round. However, the experts are concerned whether the sell off can be concluded within the 270 days timeframe provided under the new insolvency and bankruptcy law.
After the first round of bids, the resolution professional had told Essar Steel’s lenders that both the bids, Numetal and ArcelorMittal, were found to be not eligible; thus effectively re-opening the bid process. In order to be eligible to bid, VTB Bank of Russia, the leader in the consortium Numetal, would buy the 25 per cent stake of a trust controlled by one of the estranged promoters of Essar, Rewant Ruia. VTB Bank plans to buy the stake before April 2, the last day for submitting the second round of bids, sources said.
ArcelorMittal’s bid was rejected in the first round as it had 29 per cent stake in bankrupt firm Uttam Galva. Besides, its chairman LN Mittal had 33 per cent stake KSS of Kazakhstan, which in turn held 100 per cent in KSS Petrona, a non-performing asset (NPAs) in India. The Uttam Galva stake has been sold back to its promoters, Miglani family. But there is no clarity on KSS Petron stake.
ArcelorMittal and Numetal had earlier approached the Ahmedabad bench of the National Company Law Tribunal (NCLT) against the resolution professional’s decision to disqualify them. It will be coming up for hearing on April 4.
