ArcelorMittal named preferred bidder by Essar Steel lenders
The world’s largest steelmaker ArcelorMittal has been declared the preferred bidder by lenders of debt-laden Essar Steel ahead of metals player Vedanta Group, bankers said, as the 14-month battle for ownership of the prized asset draws to a close. The committee of creditors (CoC) for Essar Steel met to discuss the bids on Friday, a day after the Supreme Court-mandated two-week deadline ended.
“ArcelorMittal has been declared the highest, or H1, bidder mainly because of its track record and experience in managing steel companies successfully for years. Both Arcelor-Mittal and Vedanta were very close in terms of the money offered, but we think (Lakshmi) Mittal can do a better job in turning around the company,” a senior banker closely involved in the process told media.
If the steelmaking asset located in Hazira, Gujarat, is finally awarded to ArcelorMittal, it will fulfill Mittal’s more than a decade-old ambition to have a beachhead in the country. Mittal has had plans since 2005 to set up greenfield facilities in Jharkhand and Karnataka, but the plans have not progressed.
“ArcelorMittal confirms it has been informed by the CoC for Essar Steel that it has been evaluated to be the H1 Resolution Applicant (the preferred bidder) in the corporate insolvency resolution process for Essar Steel,” said a statement from the global steel behemoth.
“The company will now enter into further final negotiations with the CoC,” it added. Essar Steel owes Rs 49,000 crore to various banks and was admitted by the National Company Law Tribunal (NCLT) in August last year, led by lead banker State Bank of India.
ArcelorMittal had offered to pay back Rs 7,469 crore of dues owed by Uttam Galva and KSS Petron in addition to an upfront payment of Rs 35,000 crore for loans due from Essar Steel, pegging its total commitment at more than Rs 42,000 crore.