Business Standard reported that ArcelorMittal’s bid for Essar Steel in the first round of bidding for the stressed asset is likely to be higher than that of Numetal.
The financial bids submitted by the two companies on February 12 were opened on Tuesday by the committee of creditors (CoC) at a marathon meeting lasting more than seven hours. Sources close to the development said lenders would have to take a 34% haircut if they selected ArcelorMittal’s offer and a bigger one if they chose Numetal. Essar Steel’s admitted financial claims stand at INR 490 billion.
According to sources, ArcelorMittal offered INR 303 billion to secured lenders, and around INR 2 billion each to unsecured lenders and operational expenses. ArcelorMittal has also committed equity infusion of INR 80 billion. However, lenders could still opt for a fresh round of bids, but that was likely to be legally challenged. Legal sources in Numetal said a fresh round of bidding would be challenged. Alternatively, lenders could give time to ArcelorMittal and Numetal for rectification if found ineligible. A decision on the course of action is likely to be taken in the next CoC meeting, slated for April 27.
The rationale for fresh bids, cited by one of the lenders, was that the offers were made based on the liquidation value of Essar Steel, Rs 220 billion. The liquidation value was included in the information memorandum. However, in January, the Insolvency and Bankruptcy Board of India (IBBI) amended the rules and did away with the requirement of disclosing the liquidation value in the information memorandum for better price discovery.
Source : Business Standard