Essar Steel lenders to hear out Arcelor, Numetal

MUMBAI: Vedanta and Numetal have queered the pitch for creditors by offering to match the best bids, even as lenders give a chance to the two original bidders which were initially rejected. The lenders have decided to abide by the National Company Law Tribunal (NCLT) order to study the proposals by ArcelorMittal and Numetal and give them time to correct the discrepancies in their bids.
The committee of creditors (CoC) to Essar Steel met in Mumbai for the second day this week with a majority of them voting to support the NCLT decision instead of inviting fresh bids.This decision means that both Numetal and ArcelorMittal will make presentations to the CoC, which will give them a month to make themselves eligible. If the CoC does not find either of them to be eligible in one month, it will need to seek more time from the tribunal. Essar Steel owes lenders Rs 44,000 crore and is facing total claims of nearly Rs 55,000 crore.
Earlier, the bids put up by ArcelorMittal and Numetal were not considered by the CoC as the resolution professional had termed them ineligible. Numetal was declared ineligible because of its links with Essar Steel promoters, while ArcelorMittal was rejected because two Indian companies acquired by the world’s largest steelmaker — Uttam Galva and KSS Petron — were classified as defaulters.
ArcelorMittal’s stake sale in the defaulting companies did not help as, on the date of commencement of the corporate insolvency resolution plan, it was a promoter of the defaulting company. There is a provisio in the law where even a defaulting company can participate after repaying all outstanding loans in full. ArcelorMittal can, therefore, still cure its proposal by repaying close to Rs 7,000 crore that is owed to banks by Uttam Galva and KSS Petron.
Numetal, which is backed by Russia’s VTB Capital, is understood to have written to lenders that it will match ArcelorMittal’s higher bid provided ArcelorMittal is declared ineligible.
Meanwhile, Vedanta has communicated to the lenders that it will match the best bids and has urged the CoC to open the second round of bids. It was the second round that had seen Vedanta enter the fray as a new participant.
Another company JSW had also come in as a partner to Numetal after it had dropped Rewant Ruia (son of Essar Promoter Ravi Ruia) as an investors as his presence had turned out to be contentious while determining eligibility. JSW has now said that it is willing to participate as a solo participant if bids are re-invited.