New Delhi: Bids by ArcelorMittal and a consortium led by Russia's VTB Group to acquire debt-laden Essar Steel are said to have been recommended for rejection by the advisers evaluating the offers, sources privy to the development said.
They said the legal and financial consultants, advising the interim resolution professional overseeing the sale of Essar Steel, have recommended the rejection of ArcelorMittal's bid on the grounds that it held stake in Uttam Galva Steel Ltd - a delinquent borrower.
The bid by Numetal, the VTB-led special purpose investment vehicle, has been proposed to be considered ineligible as Rewant Ruia, son of Essar Steel founder Ravi Ruia, owns 25 per cent of it.
The interim resolution professional is yet to take a call on the disqualification of the two firms, which were the only entities to have put in bids last week.
While neither the interim resolution professional nor the advisers could be immediately reached for comments, a Numetal spokesperson said: "We have not received any such information from the resolution professional or his legal advisors."
"Numetal is a fully eligible resolution applicant and has submitted its resolution plan for Essar Steel."
ArcelorMittal, which had submitted a bid together with Nippon Steel & Sumitomo Metal Corp, had earlier this month transferred a 29.1 per cent stake in Uttam Galva to the other founders. VTB has 40 per cent interest in Numetal while the remaining is with private equity funds.
Sources say Rewant Ruia is just a financial investor with a beneficial minority stake in Numetal and is neither a promoter nor will he have control or management rights.
He will also not have any role in the management of Essar Steel, they said.
Founded by Shashi and Ravi Ruia, Essar Steel was referred to the National Company Law Tribunal last year after accumulating Rs 51,800 crore in unpaid debts.
Essar Steel is an integrated flat steel producer. Its main production facility is in Gujarat. It has a crude steel capacity of 9.6 million tonnes per annum. PTI
