ArcelorMittal will have to increase its bid from ₹30,500 crore to match Numetal’s bid of ₹37,000 crore for bankrupt Essar Steel, besides paying ₹7,000 crore dues on account of Uttam Galva and KSS Petron by Tuesday.
The company’s resolution plan for Essar Steel included ₹30,500 crore upfront cash for the lenders and another ₹8,000 crore of working capital for Essar Steel, which had dues of over ₹49,000 crore with bankers.
Comparatively, Numetal’s resolution plan offered ₹37,000 crore upfront payment to the secured financial creditors. The company had proposed to spend another ₹7,000 crore to settle the dues of unsecured financial creditors, operational creditors, workman dues and working capital for the revival of the Essar company. When asked if ArcelorMittal will go to the Supreme Court against the NCLAT order, the company, in an e-mail statement said, “We note today’s NCLAT judgement and await the full order, which we will review before determining our next steps.”
Sanjeev Bhasin, executive vice-president, Markets at IIFL, said, “Essar Steel plant is very attractive and is a strategic fit for ArcelorMittal and they will go to any extent [Supreme Court] to secure this deal. They have been trying to enter the Indian markets for long and if the court asks them to pay their existing dues, that has to be paid. The steel cycle has turned around and there will be a rally in all commodities.”
“Anil Agarwal gave a hint that they [Vedanta] will not be aggressive in Essar Steel, so it will be a tough fight between ArcelorMittal and Numetals. Mittal will have to pay the existing dues and match Numetal’s revised offer to buy Essar Steel. I am happy that the defaulting promoters are out and bankers are getting their money not only for Essar Steel, but also for Uttam Galva and KSS Petron,” investment advisor S.P. Tulsian told The Hindu .
Paras Bothra, president - Equities at Aashika Stock Broking, said chances of Numetal winning the Essar Steel bid appeared high given that ArcelorMittal would have to comply with other obligations of the court order, making it incrementally difficult for the L.N. Mittal firm.
“It’s a good deal, whosoever gets it, given that one is getting a 10 MTPA steel unit for ₹40,000-₹45,000 crore, while it will take more than ₹60,000 – ₹70,000 crore to set up a new plant. Land acquisition and regulatory hurdles make it more difficult to set up any steel unit,” Mr. Bothra said. The NCLAT had directed that the lenders should take an early decision. On the court order, a SBI spokesperson said, “In view of the NCLAT order pronounced today, SBI withdraws the process of sale of debt of Essar Steel India Ltd. and will proceed as per the order of the NCLAT.”
Published - September 07, 2018 10:13 pm IST
