As per the recent updates on Essar Steel’s bankruptcy case, Numetal, its prominent bidder has pleaded to the court to scrap the first round of bidding and consider its second round’s higher bid offer of INR 37,000 crore made against Arcelor Mittal.
The disclosure was made even as the bankruptcy court has declared the second round invalid and directed the resolution professional (RP) not to open those bids.
On 20 Apr’18, the Ahmedabad bench of NCLT (National Company Law Tribunal) had declared the invitation for the company’s second round of bidding as invalid and had asked the lenders and RP of bankrupt Essar Steel to reconsider the first bids submitted by original bidders Arcelor Mittal and Numetal.
However, the Russian bank VTB-backed Numetal wants the first round of bids to be scrapped and the lenders to consider bids submitted in second round. It is appealing against lenders’ decision to demand that both the bidders in the first round –Numetal and ArcelorMittal – pay up dues to be eligible for bidding in bankruptcy process.
According to the market reports, the disclosure of second round’s bidding amount was made by Numetal as a part of the argument that Numetal made to the higher bench of bankruptcy court, stating that they were being unfairly asked to regularise dues of companies related to Ravi Ruia. The National Company Law Appellate Tribunal (NCLAT) will hear the matter on May 22.
As per SteelMint sources, while Numetal’s second round of bidding amount was INR 37,000 crores, Arcelor Mittal has offered INR 30,000 crore, thus clearly indicating Numetal’s interest in second round of bidding.
Arcelor Mittal wants the first round of bids to be considered
In the first round of bidding Arcelor Mittal’s and Numetal bids that were submitted in Feb’18 were rejected on 21 Mar’18 for eligibility reasons under section 29A of IBC (Insolvency and Bankruptcy Code) which bars defaulting company or any related parties having stake in defaulting company to participate in the bidding process.
Numetal was rejected on the grounds that Rewant Ruia, one of the partners in the VTB-led consortium, is the son of Essar promoter Ravi Ruia and is, therefore, seen as a connected party. While ArcelorMittal was rejected due to its connection with two defaulting companies Uttam Galva and KSS Petron.
Arcelor Mittal’s offer in the first round of bidding was at INR 30,000 crore while Numetal’s bid was INR 18,000 crore subsequently making Arcelor Mittal to vouch for the first round of bidding.
However, after declaring second round of bidding as invalid in Apr’18 by NCLT, the CoC (Committee of Creditors) of Essar Steel in first week of May’18 has asked Numetal Mauritius and Arcelor Mittal India to clear their dues in order to become eligible to bid for Essar Steel which is undergoing insolvency proceedings.
It is estimated that Numetal would have to pay close to Rs 40,000 crore to clear dues of many companies including that of Essar Steel, while ArcelorMittal will have to pay Rs 7,000 crore to clear overdues of KSS Petron and Uttam Galva Steels.
While ArcelorMittal has already parked INR 7,000 crore in an escrow account of SBI’s London branch, Numetal has raised an objection to lenders’ condition, stating that Ravi Ruia is not connected to them.
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