At the last meeting of the committee of creditors (CoC) on Tuesday, the first bids for Essar Steel by ArcelorMittal and Numetal were opened, after the Ahmedabad Bench of the National Company Law Tribunal (NCLT) remanded them back to the resolution professional (RP) and creditors for reconsideration. The offer from ArcelorMittal was believed to be around Rs 320 billion, while that from Numetal Rs 180 billion.
Numetal’s letter also said that it was the only eligible bidder for Essar because ArcelorMittal is the promoter of two defaulting companies
—Uttam Galva Steels and KSS Petron — and the 30-day cure period for payment of overdue payment, as suggested by the NCLT Bench, was not applicable. According to Numetal, the clause is applicable to bids that had been submitted before the Insolvency and Bankruptcy Code (IBC) was amended.
Numetal’s plea in the National Company Law Appellate Tribunal (NCLAT), on the same grounds, was admitted on Friday, as was ArcelorMittal’s, for being disqualified for bidding for Essar Steel. Both the pleas will be heard on May 17.
Sources close to ArcelorMittal said, "If Numetal has indeed matched ArcelorMittal’s financial offer, it just shows that their original offer was highly opportunistic. In any case, a bidder can't just amend its offer after submission if it has discovered its bid was too low. According to reports, ArcelorMittal clearly made the superior offer, both in terms of financial value and industry standing, and you would have thought the CoC now needs to give it serious consideration in the interests of a swift and suitable resolution for Essar Steel."
However, for ArcelorMittal, whatever it’s offering for Essar, it was likely to have an additional outgo on account of Uttam Galva and KSS Petron.
For Uttam Galva, ArcelorMittal has already written to the State Bank of India and said that it would repay all dues. The offer is Rs 53 billion, subject to reconciliation.
Uttam Galva was a non-performing asset for more than a year and under Section 29A of the IBC. ArcelorMittal sold Uttam Galva shares to terminate the co-promotion agreement, though it did not have management control or board representation. The NCLT Bench, however, observed that ArcelorMittal would have to pay overdue amount for Uttam Galva and KSS Petron to make itself eligible.
In KSS, L N Mittal had personal shareholding, which he sold ahead of the Essar bid. KSS, in turn has a subsidiary, KSS Petron, also an NPA for more than a year. Despite making observations, the Bench also asked the CoC to take an independent view in the matter.