ArcelorMittal submitted a fresh bid for bankrupt Essar SteelNSE 0.00 %, in line with a ruling by the National Company Law Appellate Tribunal (NCLAT), said people with knowledge of the matter.
However, lenders deferred a decision on Monday and decided to wait for the Supreme Court’s ruling on the eligibility of a rival bid by Numetal, following a challenge by ArcelorMittal.
The revised offer by ArcelorMittal is pegged at Rs 42,000 crore, along with a commitment to repay Rs 7,000-crore dues of two companies as per last week’s NCLAT decision, said the people cited above.
Its previous offer was said to have been in the region of Rs 38,500 crore. ArcelorMittal has also challenged a stipulation of the NCLAT ruling that it needed to pay the debts of the two defaulting companies in which CEO LN Mittal was listed as a promoter.
Numetal told NCLAT recently it had bid Rs 37,000 crore in April, while the offer by Vedanta, also made at that time, was estimated at Rs 30,000-35,000 crore, according to sources. The NCLAT decision had opened up the field to contenders other than ArcelorMittal and Numetal.
While ArcelorMittal’s offer is higher, attached conditions could complicate the choice for the lenders, which are keen to avoid any litigation that may arise from the decisions they take, said two people familiar with the matter.
ArcelorMittal confirmed that it had revised its bid for Essar Steel India Ltd (ESIL), which is undergoing resolution under IBC.
“The financial terms of the proposal are confidential, but represent a material increase to the previous offers made by the company,” the company said in a release. “The revised offer, which includes a commitment to pay the entire amount due to the financial creditors of Uttam Galva and KSS Petron, therefore represents unprecedented value to all concerned creditors.”
NCLAT had ruled that ArcelorMittal would be eligible to bid if it repaid the dues of debt defaulters KSS Petron and Uttam Galva. NCLAT had said AreclorMittal needed to pay the dues by Tuesday, September 11. IBC doesn’t allow the participation of bidders connected to companies that have defaulted on debt. However, Arcelor-Mittal filed an appeal before the Supreme Court on Monday evening against the NCLAT order, said a person aware of the development. ArcelorMittal didn’t comment on this.
At the same time, ArcleorMittal asked the committee of creditors (CoC) to “confirm the overdue amounts of UG and KS Petrron and the modality of the payment.” But it also told the committee in its submission, which ET has seen, that this “must in no way be construed” as giving up its right of appeal on the matter.
“We continue to believe that we are, and have always been, eligible to submit bids for Essar Steel and we reserve all rights in respect to any finding to the contrary, including by the honourable NCLAT,” it told the CoC.
ArcelorMittal said in the statement to ET that the revised offer demonstrates its “serious commitment to India, creditor banks and all ESIL’s stakeholders.” The company wants the dues repayment to be dependent on bankers negotiating exclusively with ArcelorMittal for Essar Steel, said some of the people cited above.
A spokesperson representing rival bidder Numetal said he did not wish to comment on its bid.
The offer by the Russian VTB Bank-led consortium, which has JSW Steel among its partners, is believed to include Rs 2,000 crore of debt owed by Odisha Slurry Pipeline Infrastructure Ltd, which transports raw material from Odisha to Essar Steel’s Hazira complex in Gujarat.
A top source close to the development said the ArcelorMittal revised offer “covers the entire secured principal debt of Essar Steel.” It is not clear whether Arcelor’s bid—said to be an improvement over its earlier offer of Rs 38,500 crore — includes payment of dues for OSPIL.
NCLAT had said Numetal would need to ensure that the consortium didn’t have any member of the Ruia family in order to be eligible to bid.
Source: Economic Times