Lenders to EPC Constructions India Ltd, an Essar group firm, have called for fresh bids after rejecting an offer from ArcelorMittal SA because they found it too low, said a banker aware of the development.

ArcelorMittal, the sole suitor for EPC Constructions, wanted to buy the company at a 93% discount, said the banker, requesting anonymity.

Fresh bids are now expected to be submitted by Tuesday, the banker said.

ArcelorMittal had placed a bid of 500 crore, against EPC Constructions’ outstanding loans of 7,268 crore. The steel giant had also promised to bring some equity into EPC Constructions if it was chosen, but the lenders were not happy with the offer and wanted more cash upfront.

A spokesperson for ArcelorMittal declined to comment in response to an emailed query. A spokesperson for IDBI Bank, the lead bank in the consortium, did not respond to an email seeking comment.

This is the second Essar group company, after Essar Steel, that ArcelorMittal has shown interest in acquiring. A wholly owned unit of Essar Projects Dubai, EPC Constructions (formerly Essar Projects India Ltd) is involved in building infrastructure projects, power plants and refineries, among others.

The banker said lenders believe ArcelorMittal was not willing to increase the bid because its original plan to use this company as an add-on to its purchase of Essar Steel is stuck in last-minute litigation. Essar Steel’s insolvency case is being heard by the bankruptcy court in Ahmedabad after its shareholders submitted a proposal to the committee of creditors (CoC) that includes settling the entire admitted claims of financial creditors, operational creditors, and workmen and employees of Essar Steel India Ltd (ESIL) totalling 54,389 crore.

On 25 October, more than 92% of creditors of Essar Steel voted in favour of handing over the debt-laden company to ArcelorMittal after the latter cleared pending dues to Uttam Galva and KSS Petron.

Meanwhile, a clutch of operational creditors has challenged the CoC and resolution professional’s decision to accept ArcelorMittal’s resolution plan. The company had proposed an upfront payment of 42,000 crore to lenders of Essar Steel and an additional 8,000 crore towards capital expenditure.

EPC Constructions was referred to the bankruptcy court by IDBI Bank and was admitted under the insolvency and bankruptcy code (IBC) on 20 April.

The banks had declared EPC Constructions a non-performing asset on 31 December 2014 and had issued a demand notice on 8 November 2017, showed documents available with the National Company Law Tribunal.

The consortium of lenders had then asked EPC Constructions’ corporate guarantors to repay the loan. The rupee-term loan was guaranteed by Essar Investment Ltd and the working capital loans were guaranteed by Imperial Consultants and Securities Ltd.

According to documents on EPC Constructions’ website, under the insolvency resolution process, the company has received financial creditor claims of 7,304 crore, of which the resolution professional has admitted 7,268 crore.

Lenders having exposure to EPC Constructions include IDBI Bank (₹1,117 crore), Central Bank of India (₹1,054 crore), UCO Bank (₹1,011 crore), Exim Bank (₹884 crore), Corporation Bank (₹722 crore) and Suraksha Asset Reconstruction Co. (₹642 crore).

The highest claim of 1,753 crore was filed by the company’s parent, Essar Projects Ltd, Dubai. The claim is being verified.

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