Mumbai: Steel giant ArcelorMittal on Friday won the race to acquire debt-laden Essar Steel as the Committee of Creditors (CoC) tasked with the resolution process picked the Luxembourg-based steel major as H1, or top bidder, for the insolvent asset. ArcelorMittal offered Rs 8,000 crore as a capital infusion into Essar Steel, while the other bidder Vedanta offered Rs 5,000 crore.
ArcelorMittal has offered Rs 35,000 crore as an upfront payment to Essar Steel lenders. Essar Steel is facing claims of over Rs 49,000 crore from its creditors. The CoC had given an eight-week deadline starting October 18 to finalise the resolution plan for Essar Steel, failing which, it will head intoned liquidation as per the Supreme Court’s order.
The final bid price will be negotiated over the weeks to come, according to sources. ArcelorMittal and Vedanta Group were the only two bidders left in the fray to acquire Essar Steel after Numetal consortium failing to repay dues of Ruia-family promoted companies within the stipulated two-week deadline given by the Supreme Court.
ArcelorMittal said in an earlier statement on October 17 that it has approved a payment of Rs 7,469 crore to the financial creditors of Uttam Galva Steels and KSS Petron to clear overdue debts so that the offer it submitted for Essar Steel India on April 2, 2018 is eligible. The Supreme Court had found ArcelorMittal to be promoter of both these non-performing assets and hence eligible to bid for Essar Steel only if their dues were paid.
Numetal, led by Russian financial group VTB, was required to pay Rs 49,000 crore—the amount owed by Essar Steel to its debtors. This was because the apex court, after examining the past and present ownership of Numetal, had concluded that “the looming presence of Shri Rewant Ruia has been found all along, from the date of incorporation of Numetal, till the date of submission of the second resolution plan”. Rewant Ruia is the son of Ravi Ruia, one of the two brothers who promoted the Essar Group. A person aware of the matter at Numetal confirmed that no dues had been repaid. The company said it wouldn’t issue a formal statement.
Agarwal open to raising bid
Mining baron Anil Agarwal has indicated that he is open to raising bid for acquiring Essar Steel, saying his flagship Vedanta is the best suited to take over the indebted firm as it is an iron ore as well as natural gas producer – key ingredients for making steel. “See the Court has clearly said that the first round of bid will be the basis and it has allowed all three bidders to come into the ring.
ArcelorMittal has to pay dues to come in the ring and NuMetal has to pay the outstanding loan to come into the ring,” Agarwal said here. Vedanta, he said, remains eligible with its first round of bids. “We are already in the ring,” he said. Once the condition set by the Supreme Court are met, the CoC will take a view on the bids received.
