ArcelorMittal emerges as highest bidder for Essar Steel; lenders to get Rs 42,000 cr

The Lakshmi Mittal-owned steel major's offer includes equity capital of Rs 8,000 crore into Essar Steel

October 20, 2018 / 09:49 AM IST
 
 
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Steel giant ArcelorMittal has emerged the highest bidder at Rs 42,000 crore to buy the stressed Essar Steel undergoing insolvency proceedings.

The Lakshmi Mittal-led firm that has surpassed Vedanta's bid will pay Rs 35,000 crore upfront to buy the debt-laden firm and also infuse an equity capital of Rs 8,000 crore, sources confirmed to Moneycontrol after a meeting of Committee of Creditors (CoC) on October 19.

"ArcelorMittal confirms it has been informed by the Committee of Creditors for Essar Steel India Limited that it has been evaluated to be the H1 Resolution Applicant (the preferred bidder) in the corporate insolvency resolution process for ESIL," the company said in a statement.

The company will now enter into further final negotiations with the CoC.

The Ruia-owned Essar Steel, with a total debt of around Rs 49,000 crore, is one of the first 12 companies referred by the Reserve Bank of India (RBI) to be filed under the Insolvency and Bankruptcy Code (IBC) in June last year.

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On the other hand, Vedanta Resources, which put in the bids in the second round, offered to pay around Rs 35,000 crore as upfront payment and Rs 5,000 crore after four years, the source added.

The CoC will now begin negotiations with ArcelorMittal on the resolution process and the transaction could be finalised by next week.

While the earlier contest was between Numetal and ArcelorMittal, the former's dues worth Rs 37,000 crore to be repaid as dues relating to Essar Steel (over and above the bid) to become eligible as the bidder became a stumbling block.

On the other hand, ArcelorMittal was asked to pay a sum of Rs 7,469 crore to clear dues of Uttam Galva Steel and KSS Petron for the eligibility.

While, sources are yet to clarify on the amount it would pay as dues to win the bid, emerging as the highest bidder will require ArcelorMittal to repay the dues before the transaction is finalised.

Earlier this month, both Numetal and ArcelorMittal were directed by the Supreme Court to pay off the dues, to clear clause 29A of IBC, which bars promoters of defaulting companies from bidding for stressed assets.

Meanwhile, VTB Bank, the lead shareholder in Numetal, has moved the Supreme Court to be considered as a solo bidder.

The petition could be taken up next week.
Beena Parmar
first published: Oct 19, 2018 10:18 pm

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