JSW Steel is considering legal opinion on the possibility of a fresh bid for Essar Steel and would be interested in entering the fray with an independent offer if it is legally tenable in light of the recent Supreme Court order.
The apex court has directed rival Essar Steel bidders, ArcelorMittal and Numetal, to clear their respective dues and meet the eligibility norms under the bankruptcy rules.
Essar Steel’s bid size is expected to be around Rs 40,000-45,000 crore, and JSW is most likely to rope in a PE partner if it is allowed an independent bid.
Officials from Numetal’s lead players VTB and JSW were in a huddle with lawyers on Monday, and so have been the bankers who are seeking legal opinion before planning their next move. Apparently, legal experts have picked up the last paragraph of the order that says if the resolution applicants pay within the period, they can resubmit their plans to the Committee of Creditors (CoC) who will get eight weeks to accept the best plan, including that submitted by Vedanta.
This is being interpreted by a section of the lawyers as an opportunity for the CoC to call for a third round of bids. Lawyers from Cyril Amarchand Mangaldas are among those advising bankers on the issue.
When asked about its plans in the wake of the order, a top source in JSW Steel told ET: “If the CoC looks at it positively and opens up the bidding process to widen the fray, we would be interested to put in an independent bid. We were keen on going it alone in the second round too but we were not allowed to do so.”
VTB has said that its interest in Essar Steel remains unchanged after the top court order, with reports suggesting it might consider bidding on its own. However, sources said that while VTB can underwrite the deal, as a state owned entity, it is unlikely to bid on its own and this could also involve a lot of tax issues. Incidentally, VTB was part of the Essar OilNSE -0.04 % deal, too, where it bought out the company’s loan book and sold it to Rosneft.
The Supreme Court order said: “If such payments are made within the aforesaid period, both resolution applicants can resubmit their resolution plans dated…to the Committee of Creditors, who are then given a period of eight weeks from this date, to accept … the best among the plans submitted, including the resolution plan submitted by Vedanta.”
JSW joined the race for Essar Steel by picking up the 25% stake held in Numetal by Aurora Enterprise, which represented Essar co-founder Ravi Ruia’s son Rewant Ruia’s interests.
Source: Economic Times