Prince Mathews Thomas Moneycontrol News
The Ahmedabad bench of National Company Law Tribunal will on March 27 take up Numetal's plea to declare its bid for Essar Steel, eligible.
The VTB Capital-led consortium had on March 20 moved the Ahmedabad bench seeking a declaration that its bid for the stressed steel company is eligible.
It was an preemptive move.
A day later, on March 22, bids by Numetal, and ArcelorMittal - the other bidder in the Essar Steel auction - were rejected by the lenders after failing to clear the eligibility test. The lenders have further called for a second round of bidding, with April 2 as the deadline for submission of bids.
Despite the setback, Numetal would be hoping that the NCLT gives it a patient hearing. "If the bench does take a decision in favour of Numetal, then the company could contest the eligibility decision by the lenders. Also, the decision to go for a second round of bidding will also be under scrutiny," said an executive from the industry.
Meanwhile, ArcelorMittal has got approval from exchanges to change its 'promoter' status in Uttam Galva Steels, giving it a boost ahead of the second round bidding for Essar Steel.
Exchanges have declassified ArcelorMittal as promoter of Uttam Galva.
According to a report earlier report in Moneycontrol, ArcelorMittal wrote to the exchanges and SEBI on March 9 to be declassified as a promoter in Uttam Galva. The NSE has approved the change on March 22 while BSE approved it a day later.
Second round
Second round of bidding may include five buyers who had expressed interest in the first round of bidding, including both Numetal and ArcelorMittal. All of them will be allowed to bid in the second round as well.
These include Tata Steel, Vedanta Group, SSG Capital, AION and Nippon Steel.
"A voting will be done among the lenders later this week to decide on allowing bids from companies who hadn't shows interest earlier," said a source.
Moneycontrol learned that JSW Steel will also be interested in putting in a bid in the second round. "If the lenders decide against letting new companies joining the fray, then JSW Steel may join a consortium," said sources.
The test
Ever since the bids by ArcelorMittal and Numetal were first submitted, there have been doubts about their eligibility. This was because of an amendment in the Insolvency and Bankruptcy Code (IBC), which prevented a promoter of a defaulting company from bidding for stressed assets.
ArcelorMittal had invested in Uttam Galva, which had defaulted on loan repayments. Though the Lakshmi Mittal later exited from the company, doubts persisted.
Similarly, Numetal's minority shareholder Rewant Ruia was termed a "connected person," as his father Ravi Ruia is one of the co-founders of Essar Steel. Numetal is headed by Russia's VTB Capital, and TPE, an engineering major. Indo International Trading is a minority shareholder in Numetal.
Essar steel company was referred to the National Company Law Tribunal last year after accumulating debt of nearly Rs 50,000 crore.
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