Fight for Essar Steel heats up in round 2

ArcelorMittal, Vedanta, NuMetal-JSW submit resolution plans,

New Delhi : Three bidders have submitted resolution plans for debt-laden Essar Steel after lenders called for fresh bids for the bankrupt company.

A grouping led by world’s biggest steelmaker ArcelorMittal, mining mogul Anil Agarwal-led Vedanta and a consortium of Russia’s VTB Capital-backed NuMetal and JSW put in bids to takeover the bankrupt steel maker in the second round of bidding.

NuMetal, majority-owned by Russia’s second largest bank VTB Group, shed Aurora Trust, which has links to Rewant Ruia – son of Essar Steel promoter Ravi Ruia, in the second round of bidding. While its promoters bought out Aurora Trust’s 25 per cent stake, NuMetal aligned with JSW to make the revised bid on Monday.

ArcelorMittal, which had been disqualified in the first round for being listed as a promoter of loan defaulter Uttam Galva Steel, bid along with Nippon Steel and Sumitomo Metal Corporation. This after it got declassified as a promoter of Uttam Galva Steel. The company had sold its entire holding in Uttam Galva Steel before the first round of bids in February but its name had continued as a promoter on the stock exchanges, resulting in its disqualification.

Sources said Vedanta was the surprise entrant. Vedanta has already won a bid to acquire bankrupt Electrosteel Steels in an insolvency auction.

Confirming bidding for Essar Steel, Anil Agarwal said the company has made a compelling bid. “I have put a very lucrative bid. This is a great opportunity… When we want it, we must have it.”

Six firms had initially put in expressions of interest to acquire Essar Steel, whose Rs 51,800 crore of outstanding debt claims have been admitted under the bankruptcy process. These firms included Tata Steel, state-owned SAIL, ArcelorMittal, NuMetal, Vedanta and Singapore-based fund SSG. Only ArcelorMittal and NuMetal put in bids in the first round on February 12.

Sources said JSW was interested in acquiring Essar Steel after Tata Steel’s acquisition of bankrupt Bhushan Steel for Rs 35,200 crore gave it a pole position. But bankruptcy rules did not permit anyone who had not put in an EoI to bid and so it aligned with NuMetal for bidding. Rules also bar defaulting promoters from bidding.

TyazhPromExports (TPE) of Russia and Indo International are the other shareholders of NuMetal.

Electrosteel resolution plan submitted

Kolkata: Electrosteel Steels’ resolution professional (RP) on Monday submitted Vedanta’s resolution plan before the Kolkata bench of National Company Law Tribunal for final disposal after lenders declared it as “successful resolution applicant”. However, Renaissance Steel, one of the resolution applicants, was opposing the Committee of Creditors’ (COC) decision in respect to eligibility of its rival bidders, Vedanta and Tata Steel.

A counsel, appearing for Renaissance, said: “We are opposing the CoC’s decision on eligibility of Vedanta and Tata. We also opposed the resolution plan (of Vedanta).”  Following a direction from the Tribunal, the CoC to the insolvent steel producer had decided to go ahead with Vedanta, rejecting objections raised by Renaissance Steel.

Tatas to pay Rs 35,200 cr to Bhushan creditors

New Delhi: Tata Steel has offered to pay Rs 35,200 crore upfront to financial creditors of Bhushan Steel, while offering Rs 1,200 one year after the completion of transaction to operational creditors, the committee of creditors of Bhushan Steel informed NCLT on Monday.

The committee of creditors chose Tata Steel as the highest bidder, and therefore the successful applicant, for buying Bhushan Steel. Apart from the outright payment to financial and operational creditors, the Tata group company has also offered to acquire shares from current promoters of Bhushan Steel, convert other debt worth 12.27 per cent equity in the company and give it to financial creditors, the counsel appearing for committee of creditors said.

Hearings in the case are likely to continue on Tuesday as nearly 6 per cent of Bhushan Steel employees have objected to Tata Steel being the buyer.