The deadline to submit bids for bankrupt Essar SteelBSE 0.41 % has been extended to the second week of February from January end as potential bidders have sought time to finalise the structure and funding of their proposals, said people with knowledge of the matter.
“At a high-level bankers’ meeting on Friday with the resolution professional (RP) of Essar Steel, it was decided to defer the bidding date to the second week of February,” said a senior executive.
“Lenders will meet again next week to finalise a date.” Potential bidders will have to submit a resolution plan along with a bid bond guarantee to lenders, the person said.
The earlier deadline was January 29. “The RP had received several inquiries from potential bidders about the technical and operational details about the steel plant and, after responding to them, the bidders needed to evaluate their offer in context of the additional information,” said one of the persons cited above. “Considering this, lenders have agreed to give additional time.” The demand for an extension of the deadline suggests that interest in the asset is gaining and that the haircut may be kept to a minimum, said the people cited above.
Due Diligence
Tata SteelBSE 0.07 %, Nippon Steel, VedantaBSE -1.63 % Resources and ArcelorMittal are among those that have completed due diligence of Essar Steel so far, said people with knowledge of the matter.
“The bidding for Essar Steel is expected to be very aggressive, which will enable lenders to negotiate better price,” said a bank chief. Essar Steel faces claims of Rs 54,851 crore from financial creditors and Rs 22,914 crore from operational ones.
Essar Steel is among the 12 companies that the Reserve Bank of India directed banks to refer to the National Company Law Tribunal (NCLT) in June. Of which, Era Infrastructure is still under litigation at the Debt Recovery Tribunal (DRT) while Essar Steel was the last to be admitted for insolvency resolution.
This is because Essar had opposed the RBI move on the grounds of discrimination.
The matter went to the Supreme Court, which decided in favour of the banks and RBI. Since Essar Steel was among the last in the list to be referred to bankruptcy court, lenders have a longer time to resolve it compared with the other accounts.
