VTB-led Numetal, a prominent bidder for Essar SteelNSE 0.00 %, has disclosed that they have made a bid of Rs 37,000 crore in the second round of bidding for the bankrupt steel company while pleading that the court should order the lenders to scrap the first round. In the first round, Numetal had offered Rs 19,000 crore while ArcelorMittal made a bid of Rs 32,000 crore for the company.
The disclosure was made even as the bankruptcy court declared the second round invalid and directed the resolution professional not to open those bids. In the second round, Numetal dropped Rewant Ruia, son of Ravi Ruia, promoters of Essar Steel, and replaced him with JSW Steel.
The disclosure was part of the argument that Numetal made to the higher bench of bankruptcy court, stating that they were being unfairly asked to regularise dues of companies related to Ravi Ruia. The National Company Law Appellate Tribunal (NCLAT) will hear the matter on May 22.
The higher bid is likely to cheer lenders who are looking at a lower haircut for Essar Steel, which has dues of over Rs 49,000 crore. According to a person present at the court hearing, ArcelorMittal’s legal representative said that while Numetal has offered to pay Rs 7,000 crore in second round, they (Numetal) have to actually pay Rs 42,000 crore to become eligible.
The resolution professional Satish Gupta had declared both the bids received in the first round ineligible, following which a second round of bidding was conducted in early April. Vedanta Resources, Numetal in partnership with JSW Steel, and ArcelorMittal in tie-up with Nippon had bid in the second round.
At that time, Numetal had moved the bankruptcy court against lenders’ decision to go for the second round, pleading that they were eligible in the first round itself and that the bids received in second round should not be opened until the court decides on the matter. In response to Numetal’s first plea, the tribunal last month ordered lenders to give both bidders time to comply with IBC norms and declared the second round invalid.
Banks led by State Bank of India have written to both the bidders — Numetal and ArcelorMittal — that they should clear dues of defaulting companies connected to them in order to be eligible. It is estimated that Numetal would have to pay close to Rs 40,000 crore to clear dues of many companies including that of Essar Steel, while ArcelorMittal will have to pay Rs 7,000 crore to clear overdues of KSS Petron and Uttam Galva Steels.
