Numetal Consortium and ArcelorMittal, the two initial bidders for Essar Steel, have attached conditions before they make any correction in their bid or any action they would take to acquire the steel asset, an industry source told DNA Money. According to a source, the Russian VTB Bank-backed Numetal consortium has offered to match the superior bid of ArcelorMittal only if the latter is declared ineligible. The source said Numetal did not want to spark a bidding war that could get out of hand.

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In the first round of bidding, Numetal had offered to pay off Rs 18,000 crore of Essar Steel’s total debt of Rs 49,000 crore against ArcelorMittal’s offer of Rs 32,000 crore. ArcelorMittal has also attached a string to the removal of a defect in its bid, entailing paying off debts of stressed KSS Petron and Uttam Galva.

According to the source, ArcelorMittal wanted “some kind of guarantee” before it pays the debts of KSS Petron and Uttam Galva.

“I don’t think ArcelorMittal would pay Rs 8,000 crore debt (of KSS Petron and Uttam Galva) as it is not sure that it would be eligible even after paying off. It doesn’t want to take the risk of Rs 8,000 crore loss or let that money go down the drain. That is why it is asking for some kind of guarantee from lenders before it does that,” said the source. 

The committee of creditors (CoC), which met last Friday, has given seven days to the two bidders to “cure” their bids and come back with a revised bid to meet the eligibility criteria under IBC. 

This means ArcelorMittal will have to clear all liabilities of Uttam Galva and KSS Petron and Numetal would have to replace Rewant Ruia’s Aurora Enterprise with another investor in its consortium and match ArcelorMittal’s bid offer.

“Both ArcelorMittal and Numetal are saying they will take corrective actions but have asked lenders to ensure a few things too. So, basically they have attached strings (conditions) to it,” said the source. 

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The Essar Steel’s resolution of non-performing asset (NPA) under IBC has become litigious with bidders knocking on the doors of NCLT and National Company Law Appellate Tribunal (NCLAT) to challenge their disqualification by CoC.

Recently, the Ahmedabad bench of NCLT ordered the lenders and the resolution professional (RP) of Essar Steel to relook at the eligibility of the two bidders in the first round.

It also asked the CoC to provide “opportunity” to bidders to correct defects in their bid within 30 days and declared the second round of bidding invalid. The second round had seen Anil Agarwal-owned Vedanta and JSW Steel (as an investor in Numetal consortium) jump into the fray.   

Last week saw the two initial bidders move the NCLAT contesting eligibility criteria for bidders. The appellate tribunal had admitted the case and will hear it on May 17.

The source expects cases relating to Essar Steel to reach Supreme Court.

By Praveena Sharm, DNA Money