ArcelorMittal bags Essar Steel with a bid of just Rs 42,000 Crore, against Ruia's bid Rs 54,389 Crore

October 27, 2018:

Mining baron Anil Agarwal’s Vedanta was the third bidder.

NRI billionaire Lakshmi Mittal-led ArcelorMittal Friday has won a bid to acquire debt-laden Essar Steel for over Rs 42,000 crore.

This deal that will help fulfil the world’s largest steel maker’s long-time ambition of having an India mill.

Even though the Ruia family offered to pay lenders Rs 54,389 crore including Rs 47,507 crore in upfront cash to clear all their dues in a last-ditch effort to avert losing their flagship company, a committee of Essar Steel creditors picked ArcelorMittal on October 25.

Subsequent to being declared the highest bidder on October 19, the Committee of Creditors (CoC) has issued ArcelorMittal a Letter of Intent (LoI) declaring them as “successful applicant”.

It cannot be ignored just because the offer to pull out the company out of bankruptcy was not made before CoC called bids.

He said Section 12A of the Insolvency & Bankruptcy Code (IBC) that allows withdrawal of insolvency proceedings subject to approval by 90 per cent of the creditors & the National Company Law Tribunal (NCLT), was introduced in June 2018, much after the EoI in case of Essar Steel was floated on October 20, 2017.

It wasn’t immediately clear if lenders even considered offer of Essar Steel promoters.

In a separate statement, Nippon Steel & Sumitomo Metal Corporation said it had been “engaged in, together with ArcelorMittal, acquisition procedures aiming at jointly acquiring & managing Essar Steel”.

But many saw it as being violative of Section 12A of the IBC since the bid process is now over & Ruias haven’t offered to clear dues of group firms which total to around Rs 80,000 crore.

Mining baron Anil Agarwal’s Vedanta was the third bidder.

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