Essar Steel auction: Banks ask ArcelorMittal to hike offer by nearly Rs 4,000 crore

Essar Steel's lenders have asked ArcelorMittal to increase its offer for the debt-laden steelmaker by nearly Rs 4,000 crore. ArcelorMittal had offered an upfront payment of Rs 35,000 crore, and emerged as the highest bidder late last week. The company had beaten a similar bid from Vedanta Resources.

But while the LN Mittal company also promised additional equity infusion of Rs 8,000 crore, the Anil Agarwal-led Group offered Rs 5,000 crore. The lenders have now asked ArcelorMittal for an upfront payment of Rs 39,000 crore.

The additional demand has also delayed a scheduled voting on the ArcelorMittal offer. Essar Steel's lenders were expected to vote on the offer on Monday.

An ArcelorMittal spokesperson declined to comment.

Essar Steel, which was referred to the insolvency courts last year, has debts of Rs 49,000 crore.

ArcelorMittal has already paid Rs 7,649 crore to clear dues of Uttam Galva Steel and KSS Petron. The two companies, in which ArcelorMittal was a significant shareholder, had defaulted on loan repayments. Supreme Court had asked ArcelorMittal to clear the dues to be eligible to bid for Essar Steel.

Numetal, which was involved in a close fight with ArcelorMittal, was pushed out of the race after Supreme Court asked it to clear dues of up to Rs 37,000 crore.

However, its lead shareholder, Russia's VTB Bank had approached the Supreme Court to be considered as a solo bidder for Essar Steel. The Court is expected to take up the petition this week.