Mittals, VTB put in bids for Essar Steel
New Delhi: Global steel major ArcelorMittal and Russia's VTB have submitted their bids for debt-laden Essar Steel, which is undergoing insolvency proceedings.
However, Vedanta Resources, Tata Steel and JSW are likely to have refrained from the bidding, according to a report by PTI. Names of any other possible bidders also could not be confirmed till the time of going to press.
The Ruias had been unable to pay back Essar Steel's huge debt of over Rs 44,000 crore, resulting in its debt being declared a bad loan and the RBI asking banks to recover the money by using the government's new bankruptcy code.
The VTB-led consortium includes Rewant Ruia-led Numetal Mauritius and Russia-based Tyazprom Export, a construction engineering and management consulting firm specialising in steelworks.
Numetal will be a junior partner in the consortium and hold about a 26 per cent stake, said sources.
Questions are being raised about whether Rewant, son of Ravi Ruia, will be considered a related party and the VTB bid will be struck off.
"The rules as given by the amended bankruptcy code are clear - related parties are not allowed to bid for a firm undergoing bankruptcy proceedings," said Sanjay Bhattacharya, a former managing director of the SBI, a key lender to Essar Steel.
Amendments to the insolvency bill, which were cleared two months back, have brought in a phrase "or in concert with" to define connected parties who may be linked to the defaulting borrowers and barred from bidding for the stressed assets.
ArcelorMittal's bid may also be a challenge, sources said, as last week the Luxembourg-based steel giant transferred its 29.1 per cent stake inUttam Galva Steels to other founders, a move thatanalystssaw as a sign of the European giant's plan to bid for Essar Steel. Uttam Galva will also be facing bankruptcy proceedings and any promoter of such a firm is ineligible to bid for another bankrupt entity.