MUMBAI: The ongoing resolution process of debt-ridden Essar Steel took another turn, with the National Company Law Appellate Tribunal (NCLAT) on Friday ordering that both the bidders, Numetal and ArcelorMittal, were eligible to bid for its assets.
Friday’s NCLAT order has prompted bankers like SBI to halt their proposed Essar debt sale process to asset reconstruction companies, in the hope of reaping better returns for investment.
The previous NCLT order has been now set aside with the NCLAT’s two-judge bench giving ArcelorMittal three days till September 11 to clear dues of its subsidiaries aggregating over `7,000 crore, while accepting Russia’s VTB-backed Numetal’s reworked bid in March after restructuring the shareholding of its India arm, as eligible.
The sealed second round of bids with the committee of creditors (CoC) will be opened soon, with the tribunal ordering the CoC to negotiate and get the highest value.
Essar Steel, one of the RBI’s 12 large accounts listed for resolution, was admitted to NCLT in June 2017. It has a debt exceeding `45,000 crore, of which SBI’s exposure is in excess of `13,000 crore.
Following NCLAT’s latest order, the SBI said it will withdraw the sale process. “SBI withdraws the process of sale of debt of Essar Steel India Ltd and will proceed as per the order of the NCLAT,” the bank said in a statement.
In March, the creditors found both Numetal and ArcelorMittal ineligible and called for a second round of bids that saw even Vedanta chipping in. However, Numetal moved NCLT seeking a stay on the opening of the bids and subsequently, the NCLT said the second round of bids might have been prudent, but not legally sound.
It may be noted that Numetal’s second bid eliminated the shareholding held by a trust, which counted promoter Rewant Ruia as a beneficiary.
JSW Steel Ltd then joined the consortium. Numetal had moved NCLT, which allowed ArcelorMittal to bid for EssarSteel by paying up dues within 30 days, while ArcelorMittal too had filed a separate appeal to bid for Essar Steel.