Lenders of Essar Steel may have to wait for the Supreme Court verdict on the plea by VTB Group of Russia to bid solo for the insolvent asset before awarding the company to ArcelorMittal. The Russian firm had moved court in anticipation of a failed bid by the NuMetal consortium, of which VTB was a part.
On Friday, the committee of creditors (CoC) of Essar Steel Ltd. picked ArcelorMittal as H1 Resolution Applicant or preferred bidder for Essar Steel after VTB-led NuMetal failed to clear its dues to become eligible for bids.
The final bid price will be negotiated in the weeks to come, the Luxembourg-based company said in a statement. A NuMetal spokesperson, however, declined to comment.
Last week, VTB Capital approached the Supreme Court to seek permission to bid alone for the asset.
“The CoC can start negotiating with ArcelorMittal only if the Supreme Court refuses to allow VTB Group to bid solo for Essar Steel,” a person in the know of the development told The Hindu .
With Rewant Ruia, son of an Essar Steel promoter, being part of the Numetal consortium, the VTB-backed firm was required to pay ₹49,000 crore — the amount owed by Essar Steel to its creditors. But it failed to pay within the two-week deadline given by the court to become eligible. A NuMetal source confirmed that the firm had not paid any dues to Essar lenders yet.
However, ArcelorMittal last week approved a payment of ₹7,469 crore to the financial creditors of Uttam Galva and KSS Petron, to enable it to bid for Essar Steel.
Paras Bothra, president, equities at Ashika Stock Broking, believes that it will be a good buy for ArcelorMittal. “It’s a timely buy for ArcelorMittal as the steel sector has turned around. ArcelorMittal was trying to enter India for over a decade now, but failed to get land and iron ore mines.”
Meanwhile, Sajjan Jindal-led JSW Steel had written to CoC seeking its approval to place an independent bid.
Essar Steel’s CoC is likely to meet on Monday, when VTB’s plea to allow it to place an independent bid may come up for listing.
ArcelorMittal has reportedly agreed to pay ₹35,000 crore as upfront payment to the lenders of Essar Steel and infuse ₹8,000 crore into the company compared with Vedanta’s offer of ₹34,000 crore and NuMetal’s ₹37,000 crore.
