Stage set for second round of bidding for Essar Steel

Nippon Steel and Sumitomo Corporation, are the likely bidders for the troubled steel major when the consortium of lenders invite the bidders on Monday. Only companies who had put in their expression of interest (EOI) in the first round will be allowed to bid, bankers said. Though Anil Agarwal-promoted Vedanta had pulled out in the first round of bidding, it is expected to participate in the fresh round despite having won Electrosteel Steels in an insolvency auction. “Vedanta has taken over Electrosteel, but it is only a very small facility. If they want a bigger play in India, they will look at scale. Essar Steel will fit into this scheme. So they are likely to bid,” a senior banker said.

Tata Steel, which emerged winner for Bhushan Steel and Bhushan Power and Steel, is unlikely to bid for the Essar Steel’s 10-million tonne capacity plant at Hazira in Gujarat. Essar Steel, which owes Rs 37,280 crore to the banks, is fighting a bankruptcy battle in the National Company Law Tribunal (NCLT) under the new Insolvency and Bankruptcy Code, 2016. The committee of creditors (CoC) has called for fresh bids on April 2 after both the first-round bidders, ArcelorMittal and Numetal, were found ineligible.

The Numetal consortium led by VTB Capital of Russia would buy out the 25% stake of Aurora Enterprises, a trust controlled by Rewant Ruia, son of Ravi Ruia, one of the founders of Essar Steel. Other key shareholders of Numetal include TyazhPromExports (TPE) of Russia and Indo International. ArcelorMittal’s bid was rejected in the first round as it had 29% stake in the bankrupt firm Uttam Galva. It has now sold it back to its promoters, the Miglani family’s Sainath Trading Company, in order to clear its way for Essar Steel bidding.

Uttam Galva had defaulted on a Rs 5,000-crore loan. ArcelorMittal applied to Securities and Exchange Board of India to remove its name from the company records. Uttam Galva has also made a onetime settlement offer to the lenders to settle its defaults. Meanwhile, Numetal put forward on March 29 an agreement to purchase 70% equity in Odisha Slurry Pipeline Infrastructure Ltd (OSPIL) from Srei Infrastructure Finance.

OSPIL is the largest slurry pipeline in India that supplies iron ore from mines in Odisha to Essar Steel. In a letter to the lenders, OSPIL said it has now arranged funds of over Rs 2,000 crore to repay them the entire debt. Such repayments will be done latest by April 30, 2018, the company said.

However, the bankers have rejected the plan saying that OSPIL is already in the NCLT for settlement of Rs 2,000 crore of its debt. Bankers had already got a stay from the Delhi High Court when Numetal wanted to take over the equity in OSPIL. Srei Infrastructure Finance owns OSPIL. The case will be coming up for hearing on April

By Manju AB

(Source: DNA Money)