Mumbai: Lenders to Essar Steel Ltd have decided to reopen bidding for the debt-ridden steel maker after declaring ArcelorMittal and Numetal Mauritius Ltd ineligible, said two people aware of the matter. The committee of creditors of Essar, which met on Wednesday, took this decision. Bidding will be open to all six companies which had submitted expressions of interest in Essar Steel in the first round of bidding, said these people. ArcelorMittal and Numetal can also bid provided they take “corrective action”. The tentative deadline for fresh bids is 2 April.
On Wednesday, Essar’s committee of creditors cited section 29 (a) of the insolvency and bankruptcy code to reject ArcelorMittal’s and Numetal’s bids. The clause bars wilful defaulters, defaulters whose dues had been classified as non-performing assets (NPAs) for more than a year, and all related entities of these firms from participating in the resolution process. The defaulters can become eligible for bidding if they pay up the amount outstanding.
In ArcelorMittal’s case, the firm had a stake in Uttam Galva Steel Ltd,a delinquent borrower.
“ArcelorMittal has sold off its stake in Uttam Galva Steels but the firm’s exit needs to reflect in the official documents filed with the Securities and Exchange Board of India as well, which has not happened so far. Moreover, in the previous round of bidding ArcelorMittal was still holding stake in Uttam Galva which made it ineligible as well,” said one of the people cited earlier.
An ArcelorMittal spokesperson declined to comment.
In Numetal’s case, one of its minority shareholders, Auro Enterprises, is owned by a trust that has Rewant Ruia, son of Essar Group’s co-founder as a beneficiary. The person cited earlier said that lenders have suggested that the Ruia-connected entity exit its holding in Numetal to become eligible for the next round of bidding.
Numetal did not respond to an email seeking comment.
Earlier on Wednesday, before the creditor panel arrived at its decision, Numetal filed a petition at the Ahmedabad NCLT to determine its eligibility as a resolution applicant. The firm said that the creditor panel decision would be subject to the order passed by the court.
“Numetal’s application was necessitated as there is some apprehension that Numetal’s resolution plan may not be considered properly by the committee of creditors,” Numetal said in a statement. The petition will be heard on 4 April.
Six firms had submitted expressions of interest for the beleaguered steel firm. Apart from ArcelorMittal and Numetal the other firms were– Nippon Tata Steel, Vedanta Group, Steel Authority of India Ltd Steel & Sumitomo Metal Corporation.
“All firms who participated in the first round can bid again. For those who have been disqualified, they can take the prescribed corrective action and participate as well,” said the second of the two people cited earlier.
Essar Steel is one of the twelve accounts referred by the Reserve Bank of India for resolution under the insolvency code. The firms owes around Rs 49000 crore to its lenders.livemint