A steel factory (Source: Bloomberg)

Two Bidders Submit Resolution Plans For Essar Steel As Deadline Ends

Two bidders have submitted final resolution plans for Essar Steel Ltd., which is currently being resolved under the Insolvency and Bankruptcy Code (IBC).

Numetal Mauritius – a special purpose vehicle (SPV) in which the Ruia family has an interest – has submitted a bid, according to two people familiar with the matter. On Jan. 16, BloombergQuint reported that a Singapore based trusteeship, of which a Ruia family member is the beneficial owner, holds 30 percent in Numetal Mauritius. Russia’s VTB Bank holds 40 percent in the SPV, while SSG Capital holds the remaining 30 percent.

Numetal Mauritius did not immediately respond to an email sent by BloombergQuint.

The second bidder for Essar Steel is ArcelorMittal, which is bidding through its subsidiary ArcelorMittal India Pvt. Ltd (AMIPL). In a press statement, ArcelorMittal said that, in its bid, the company has detailed an industrial plan for Essar aimed at improving its performance and profitability.

According to people in the know, Essar Steel’s liquidation value stands between Rs 15,000-17,000 crore. Liquidation value is the least recoverable value from an asset as determined by an independent evaluator. A bid would have to be higher than this value to be considered by the creditors.

Essar provides a compelling opportunity for ArcelorMittal to enter the high growth Indian steel market. The offer submitted today by AMIPL includes a detailed investment plan to address operational issues in Essar’s existing asset base. With our industry expertise and renowned operating prowess, we believe we are uniquely equipped to implement a successful turnaround which would be beneficial to Essar’s stakeholders.
Lakshmi Mittal, Chairman and CEO, ArcelorMittal

A message sent to the resolution professional was not immediately answered.

Essar Steel owes more than Rs 48,000 crore to its financial creditors and is one of the 12 largest accounts being resolved under the IBC, following instructions from the Reserve Bank of India in June 2017.

According to people involved in the matter, who spoke on conditions of anonymity, the bids will now be opened by the RP and assessed for compliance with various provisions of the code.

Following this, by the first week of March, the bids would be presented to a committee of creditors. The members of the committee would then have a few weeks for internal discussions with their respective boards.

By the end of March, the people quoted above said, there could be a vote on the resolution plans and in April the lenders would close the entire process with the company moving to the best available bidder.