Essar Steel lenders may decide on fresh bids this week
Lenders to Essar Steel Ltd are evaluating inviting fresh bids as current ones are pegged against the liquidation value, far lower than the fair value of the firm
Mumbai: Lenders to Essar Steel Ltd are evaluating inviting fresh bids as current ones are pegged against the liquidation value, far lower than the fair value of the firm.
The committee of creditors (CoC) is expected to meet in the next three days to discuss whether bids should be invited from new resolution applicants considering only 30 days are available to assess the eligibility of the bidder, said two people close to the development.
“We only have a month to assess the eligibility of the new bidder which is very less. Moreover, the current bidders are open to negotiations. So we need to take a call whether we should renegotiate or open the ground for new firms as well,” one of the two persons said.
The decision to reject the bids comes after the National Company Law Tribunal directed the CoC to reconsider the resolution plans submitted by Numetal Mauritius Ltd and ArcelorMittal Netherlands NV in the first round. The lenders had earlier rejected the bids of these companies on the basis of the related party clause of the Insolvency and Bankruptcy Code (IBC).
The tribunal has also asked both the bidders to clear debts in defaulting companies where they hold stakes before bidding for Essar Steel.
“One of the bidders has offered 60% of fair value while the other bidder has offered 40%, both of which are below the CoC’s expectation,” the two people cited above added.
Meanwhile, JSW Steel Ltd has written to the CoC to consider its application in case a fresh round of bids is called.
The resolution professional for Essar Steel had invited a second round of bidding after the bids of ArcelorMittal and Numetal were rejected in the first round. JSW had agreed to partner with Numetal in the second round in case Numetal’s resolution bid was considered eligible.