Essar Steel's Committee of Creditors will meet again on Friday after an eight-hour long meeting on Tuesday proved inconclusive.
The lenders have decided to seek a legal opinion on whether to open up the auction of Essar Steel for fresh bids. This is after they found bids by ArcelorMittal and Numetal below the fair value.
"While ArcelorMittal's bid was 60 percent of the fair value, that of Numetal was 40 per cent of the fair value," said a source close to the development.
ArcelorMittal and Numetal declined to comment.
The lenders were meeting after the Ahmedabad bench of National Company Law Tribunal last week asked them to reconsider the bids put in by Numetal and ArcelorMittal.
The two companies had approached the bench after the resolution professional overseeing the auction had termed their bids ineligible citing Clause 29 (A) of the Insolvency and Bankruptcy Code.
The clause prevents promoters of defaulting companies from bidding for stressed assets.
Apart from asking the lenders and the RP to reconsider the two bids, the bench had also termed the second round of bidding invalid.
While the bench had observed that it favoured the auction to be opened for fresh bids, it had also said that the two bidders — Numetal and ArcelorMittal — should be given 30 days to rework their proposal.
"But the lenders may now turn down the two bids on financial terms, and not Clause 29 (A), and then open up the auction for fresh round of bidding. They are doing this to avoid legal hassles," said a source close to the development.
Vedanta Resources and JSW Steel, which had joined the auction in the second round bidding, continue to be interested in Essar Steel. Both have indicated that they may opt to submit bids if the lenders allow them to.
On Monday, JSW Steel had sent a letter to Essar Steel's lenders, on its interest in bidding for the stressed company.
"The lenders feel that fresh bids will increase the value, but want to first exhaust all the other options," said an executive.
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