ArcelorMittal, the world’s largest steel producer, has withdrawn from bidding for bankrupt Bhushan Power & Steel after it conducted due diligence on the Indian company.
ArcelorMittal informed the Bhushan Power & Steel committee of creditors of its decision through a letter sent by its financial advisor Goldman Sachs, according to people with knowledge of the matter. Tata SteelBSE -0.89 %, JSW, VedantaBSE -0.23 %, AION Capital and a Dubai-based billionaire whose identity could not be ascertained remain in the fray for the bankrupt company ahead of the January 29 deadline for final offers.
JSW was a late entrant. The letter sent by Goldman Sachs did not specify why ArcelorMittal withdrew. The company had shortlisted certain assets and ‘did not want to spread itself too thin’ by submitting offers for multiple assets, a person close to the global steel major said. ArcelorMittal is said to be in the fray for Essar Steel and for Bhushan SteelBSE -0.47 %, a company owned by an estranged member of the family that owns Bhushan Power. Luxembourg-based ArcelorMittal also owns 30% in Uttam Galva Steel.
ArcelorMittal had not responded to ET’s queries till press-time Tuesday. A spokesperson for Goldman Sachs declined to comment. A request for proposal document and detailed evaluation criteria had been sent to the remaining five contenders. If financial offers for the company include upfront payments, they will be evaluated both on quantitative and subjective criteria, according to bankers. Three shortlisted bidders will be called for presentations and negotiations with respect to their resolution proposals.
The committee of creditors had also sought a report on the fair valuation of the company’s assets as it had added significant capacities from the time it went into insolvency resolution because existing credit lines were unutilised. The fair value of the assets was almost double the initial liquidation value estimate put together by Duff & Phelps and PricewaterhouseCoopers, according to the bankers. The liquidation value will likely remain unchanged though, and the fair value estimates would be used by the lenders for their own internal purposes when assessing resolution plans.
