Essar Steel India Ltd’s lenders decided to reopen the bidding for the insolvent firm while rejecting offers from rival investor groups backed by ArcelorMittal and VTB Capital, people with knowledge of the matter said.
At a meeting yesterday, the committee of creditors resolved to call for fresh bids from companies that expressed interest earlier in the process, according to the people.
They plan to invite offers from previous suitors including Tata Steel Ltd, Vedanta Ltd and Nippon Steel & Sumitomo Metal Corp, one of the people said, asking not to be identified because the information is private.
Essar Steel lenders decided yesterday to formally reject an offer made by a joint venture of ArcelorMittal and Nippon Steel, the people said.
They also disqualified the only other competing bid, which came from a VTB-led consortium, according to the people.
The bidders could become eligible again if they resolve outstanding delinquent loan issues at companies they’re connected to, one of the people said.
Essar Steel could fetch a valuation of at least $6bn in a sale, Bloomberg News reported in February.
India’s Economic Times reported the moves earlier yesterday, citing unidentified people.
Representatives for Essar Steel and State Bank of India, which is among its biggest creditors, didn’t immediately respond to requests for comment.
Representatives for ArcelorMittal and the VTB consortium declined to comment.
A representative for Alvarez & Marsal India, the resolution professional overseeing the sale, said the firm doesn’t comment on clients or potential client engagements.
A representative for Tata Steel said it would be premature to comment on whether the company will look at bidding.
Representatives for Nippon Steel and Vedanta didn’t immediately respond to requests for comment.
Advisers to the resolution professional had recommended ArcelorMittal be considered ineligible because it held a stake in Uttam Galva Steels Ltd, which is classified as a delinquent borrower, when it made its offer for Essar Steel, people with knowledge said last month.
A unit of ArcelorMittal transferred its 29.1% stake in the Mumbai-based company to other Uttam Galva founders, according to a February exchange filing.
The VTB investor group was deemed ineligible because its backers include Rewant Ruia, the son of an Essar Steel founder, the people said.
The decision was based on new Indian bankruptcy rules aimed at making it difficult for founders of firms with long-term non-performing loans from bidding for assets in insolvency proceedings.
The VTB consortium, which bid through an investment vehicle called Numetal Ltd, said last week it’s willing to buy out Ruia to ensure its offer goes ahead.
Numetal said earlier yesterday it had approached the National Company Law Tribunal to seek an assessment of its eligibility to bid.
There is “some apprehension” that Numetal’s proposal wasn’t considered properly by Essar Steel lenders, Numetal said in a statement.
The NCLT will hold the next hearing on Numetal’s application on April 4.
Essar Steel lenders decided yesterday to formally reject an offer made by a joint venture of ArcelorMittal and Nippon Steel, sources said. They also disqualified the only other competing bid, which came from a VTB-led consortium, according to sources.
