JSW, Numetal tie up to bid for Essar Steel
MUMBAI/AHMEDABAD: The battle for Essar Steel Ltd Monday saw the surprise entry of Sajjan Jindal-led JSW Steel Ltd, which has formed a tie-up with Numetal Mauritius, which is already in fray.
Monday’s auction of Essar Steel Ltd also saw bids from Arcelormittal Netherlands Nv-nippon Steel and Sumitomo Metal Corporation (NSSMC) duo, and Vedanta Plc submitting their bids for the debt-ridden steel firm. Vedanta, which had submitted expression of interest earlier, is a new entrant as well.
On March 21, the committee of creditors (COC) for Essar Steel had announced a second round of bidding for Essar Steel after rejecting the only bids received from Arcelormittal and Numetal, citing the related party clause under the insolvency and bankruptcy code (IBC). While the resolution professional for the distressed steel company received expressions of interest (Eois) from six entities in the first round, only two firms— Arcelormittal and Numetal participated in the bidding process.
The second round was open only to firms that had submitted Eois in the first round, blocking new entrants from submitting resolution plans.
Numetal had been disqualified due to Aurora Enterprises Ltd’s shareholding in the firm. During the first round of bidding Aurora Enterprises, a firm controlled by a trust owned by Rewant Ruia, held a minority stake in Numetal. Rewant Ruia is son of Ravi Ruia, vice-chair- man of Essar Group. Numetal had suggested that it was willing to drop Aurora, if required, as a corrective measure. It could not be immediately ascertained if Aurora’s stake has been bought out by existing shareholders or JSW Steel. However, a person close to the development on condition of anonymity said that JSW Steel had bought out Rewant Ruia’s stake.
Even as JSW Steel could not participate in the bidding process on a standalone basis (since it had not submitted an EOI), it decided to pair up with Numetal to submit a resolution plan. The two firms submitted a joint bid on Monday.
“Considering the lenders had allowed only those firms who had submitted EOIS in the first round to bid, we had limited options. So, we decided to partner with Numetal as they were willing to tie up with us,” Seshagiri Rao, joint managing director and group chief financial officer at JSW Steel told over phone.