For now, lenders have rejected Ruias' offer and approved the bid by ArcelorMittal Rs 42,000 crore - with an additional Rs 8,000 crore equity infusion into Essar Steel
Lenders to Essar Steel will accept the offer bid of over Rs 54,000 crore made by the company's promoters Ruias only if the court orders them to do so. For now, lenders have rejected Ruias’ offer and approved the bid by ArcelorMittal Rs 42,000 crore - with an additional Rs 8,000 crore equity infusion into Essar Steel to support operational improvement.
“We have been fighting to recover the dues for over 15 to 16 months and even attempted to find a resolution for the steel company outside of the insolvency,” State Bank of India (SBI) Chairman Rajnish Kumar said recently.
He added, “Where were they until now? They could have even approached when we filed the case at the NCLT (National Company Law Tribunal). After 15 months, now that we have found a buyer, you are saying that full dues would be paid. This is not acceptable.”
On October 26, the committee of creditors (CoC) to the debt-ridden Essar Steel approved with a 92 percent-vote in favour of the offer made by Lakshmi Mittal-owned ArcelorMittal SA, the world’s largest steelmaker, which bid in a joint venture with Japan’s Nippon Steel & Sumitomo Metal Corp.
The CoC nod requires to be approved by the NCLT.
However, within 24 hours after the CoC approved the votes in favour of ArcelorMittal’s offer, the billionaire Ruia brothers, owners and defaulting promoters of Essar Steel, said the company’s board and shareholders have offered to pay Rs 54,389 crore to creditors to settle their claims, making a last-ditch attempt to retain it and allowing it to exit from a bankruptcy process.
The repayment by Ruias also included a sum of Rs 4,995 crore to settle claims of operational creditors.
According to chief of another lender, “In the normal course, it (Ruias offer) must not be accepted because of the way they entered the bid the last minute after assessing the market value.”
Further, the executive said that there are many operational creditors including the state government of Gujarat, GAIL (Gas Authority of India), etc… which are filing case to claim their dues.
“So these cannot be ignored. We cannot say anything right now. After Binani Cement’s judgment, the operational creditors need to be taken into account and others will also take that recourse based on the same argument,” the executive said adding that the lenders will need to wait and see if there could be a “political angle” to the case.
On November 28, lawyer of the lenders argued before the NCLT bench that the offer made by the Ruias, was "not maintainable" and wanted it dismissed. The NCLT said it would hear all the pleas filed by the CoC and other aggrieved parties in the Essar Steel insolvency case on December 10.Essar Steel is one of the 12 large corporate defaulters referred by the Reserve Bank of India to be filed under the Insolvency and Bankruptcy Code (IBC). Banks and other creditors have a total debt exposure of close to Rs 49,000 crore in the company.