ArcelorMittal Revises Bid For Essar Steel, Willing To Offer Rs 42,000 Crore

ArcelorMittal, in partnership with Japan's Nippon Steel & Sumitomo Metal Corporation, is said to have offered Rs 42,000 crore to repay creditors of Essar Steel Ltd. under the insolvency and bankruptcy process, two people in the know told BloombergQuint.

The Lakshmi Mittal-led bidder revised its initial offer at a meeting of the committee of creditors on Monday. The initial offer was to repay Rs 31,000 crore to Essar Steel's lenders. While submitting its revised offer, the Luxembourg-based steelmaker said that it will repay lenders of Uttam Galva Steels Ltd. and KSS Petron Ltd. Rs 7,000 crore to settle their dues, after the National Company Law Appellate Tribunal ordered them to do so.

According to the people cited earlier, ArcelorMittal's offer for Essar Steel is higher than what VTB Capital-led Numetal Mauritius had offered in the second round of bidding. Numetal's offer stands at around Rs 37,000 crore as repayment to financial creditors. The Mauritius-based investor will offer an additional Rs 2,000 crore to lenders of Odisha Slurry Pipeline Infrastructure Ltd., which brings in about half of the raw materials that Essar Steel's plant needs.

Essar Steel owes over Rs 49,000 crore to its financial creditors, according to the claims admitted by resolution professional Satish Kumar Gupta. State Bank of India has the highest exposure among the creditors involved in the case.

Queries sent to Numetal and SBI remained unanswered. While ArcelorMittal didn't clarify the bid amount, the company confirmed in a statement it has revised its initial offer for Essar Steel.

The Essar Steel bidding process has gone through multiple twists, leading to an NCLAT order last week, where the appellate tribunal said that the second round of bids submitted on Mar. 29 should be considered by the creditors. The tribunal said that since Numetal had severed ties with the Ruia family, it was eligible to bid for the company, but ArcelorMittal would have to clear dues in Uttam Galva and KSS Petron by September 11 to become eligible.

On Monday, ArcelorMittal moved the Supreme Court against the NCLAT order on the issue of eligibility.

The NCLAT noted that since ArcelorMittal was classified as a promoter for Uttam Galva and that it had stake in KSS Petron's parent company, the steelmaker would have to repay dues in both companies to cure the Section 29A issues. The Insolvency and Bankruptcy Code, under Section 29A, doesn't allow promoters of defaulting firms to participate in a bidding process.

In the case of Numetal, the connection was more direct. Aurora Enterprises, a trusteeship, owned a 25 percent stake in Numetal. It was disclosed by the investor that Rewant Ruia, who is part of the promoter family that owns Essar Steel, is the ultimate beneficiary of the trusteeship. Before submitting the second bid, the remaining shareholders of Numetal bought out the stake owned by Aurora Enterprises, thereby curing themselves of issues relating to Section 29A, making the bidder eligible.

Anil Agarwal's Vedanta Group has also submitted a bid for Essar Steel.