SSG Capital May Be Dark Horse in Race for Essar Steel

Industry: Steel 2018-04-02

With the deadline for Essar SteelBSE 0.41 % rebids ending on Monday, the stage is set for an intense fight to acquire one of India’s largest private steel players.

While Round Two of the bidding is likely to include two original bidders, ArcelorMittal and Numetal, the dark horse in the race could be SSG Capital which can partner an interested bidder.

The Tatas too have evinced interest, according to lender sources, but it remains to be seen whether it translates into a binding bid. While ArcelorMittal is likely to go with Nippon Steel, members of the Numetal consortium are tipped to buy out Essar co-founder Ravi Ruia’s son Rewant’s 25% in Aurora Trust.

Essar’s Committee of Creditors (CoC) has allowed all those who had submitted EoIs, like SSG, VedantaBSE 0.97 % and the Tatas, to bid thus widening the fray. Top sources feel SSG Capital, a Hong Kong-based fund focused on India, China and S E Asia, could be a useful partner for any player keen on getting a wild card entry into the race.

While JSW Steel has said it was keen to bid for Essar in the second round, it did not submit EoI and hence cannot join the fray on its own. Vedanta, fresh from its success in Electrosteel Steels where it emerged as the highest bidder and was issued

While the price bids were not opened last time, banking sources said they expect this time around “both Numetal and Arcelor are likely to improve their respective offers, entailing a lesser haircut for the lender banks.”

Both Numetal and ArcelorMittal, whose original bids were found ineligible, have moved the NCLT’s Ahmedabad bench against the decision.

Top Numetal sources on Sunday told ET one of the options before it rebids could be “buying out the stake of Aurora Trust by other consortium members”, led by Russia’s VTB Bank, Indo International and TyazhpromExport, a Russian trading and engineering firm. That would resolve the contentious issue of Numetal’s alleged links with the Essar promoter family.

However, the source did not want to disclose details of the revised shareholding pattern of the SPV. In a related development, on Friday, Odisha Slurry Pipeline, a key raw material transport link for Essar Hazira plant which Numetal had agreed to buy in February, offered to pay its entire dues of Rs 2,200 crore to a dozen odd banks by April 30.

The move, seen as an attempt to secure Numetal’s bid, is however, likely to be opposed by lender banks. The latter feel this could queer the pitch for other bidders. Incidentally, none of the second round bids can be opened before NCLT Ahmedabad, which has a scheduled hearing on Monday, decides on the eligibility issue.

While announcing its intent to rebid, ArcelorMittal said it remained confident about the eligibility of its original bid. The company said its disqualification was based “on a technicality” of being still being classified as a promoter of Uttam Galva, an issue that has since been sorted out.

Minority shareholders of Uttam Galva approached the Securities Appellate Tribunal last week, alleging breach of listing regulations under Sebi’s Listing Obligations & Disclosure Requirements Regulations, 2015 and sought a stay on approval to ArcelorMittal for selling stake in Uttam Galva. The SAT refused a stay on the promoter declassification and the next hearing is scheduled on April 23.

Source: Economic Times

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