Within days of CarVal Investors securing the support of lenders to Uttam Value and Uttam Galva Metallics, it has been learnt that the bankers to the distressed steel companies had ignored a higher bid from a consortium led by SSG Capital.
The higher offer of Rs 3,300 crore made by SSG Capital Management and Synergy Metals and Mining Fund contained an upfront payment of Rs 1,000 crore against Rs 625 crore offered by CarVal, said two persons in the know. Additionally, the consortium was putting in Rs 250 crore for the operational improvement of the assets against Rs 100 crore committed by Car-Val. It also had a shorter repayment period of 3.5 years against 5 years put down by the winning bidder.
“It throws up an important question — why a higher offer wasn’t chosen by the banks?” wondered one of the persons.
ET had reported last week that CarVal was voted as the successful bidder on April 21 based on the Rs 2,541-crore offer it made along with Nithia Capital Resources, a UK-based metal investment and advisory firm led by Jai Saraf, former Mittal Steel finance director (now ArcelorMittal).
Nithia, a mere £1,000 company in terms of assets, had also named Johannes Sittard (another former ArcelorMittal executive) as part of the management team in the resolution plan that ET has reviewed, though he had resigned from the company last year. Sittard could not be reached for comments.
The offer is being executed through a trust set up by Asset Reconstruction Company of India (Arcil) and will cause the banks to take a 60% haircut.
A source close to the companies said that with the extension of the 270 days getting over on April 22, the banks did not want to begin the review of another plan that would have taken more time, risking liquidation in case the court refused any further extension.
The process got an additional 14 days on April 22. The letter of intent (LoI) has also been issued to the winning consortium which has been accepted by them. The RP has till May 7 to submit the plan in NCLT for its approval.
Emails sent to SBI NSE -1.97 % and BoB remained unanswered till press time.
