Essar Steel’s Committee of Creditors (CoC) is veering towards inviting fresh bids for the stressed asset, paving the way for JSW Steel, Vedanta, Tata Steel, ArcelorMittal and Numetal to make another attempt to acquire it.
The lenders have sought legal opinion on calling for fresh bids. A final decision will be taken later this week as not all bankers favour going through the process again.
If the lenders agree, this will be the third round of bidding for Essar Steel. The second round was scrapped by the National Company Law Tribunal (NCLT) last Friday after it hauled up the lenders and the Resolution Professional for not doing a thorough job in handling the bidding process.
While the NCLT had asked the CoC to consider the first round of bids submitted by Numetal and ArcelorMittal, the CoC is exploring whether to call for fresh bids to avoid legal complications.
“The CoC had reviewed both bids of Numetal and ArcelorMittal. However, with players like JSW Steel and Vedanta expressing interest, there is a view that the financial bids received so far were not meeting bankers’ expectations,” said a banking source.
Twists and turns
Bids put in by Numetal and ArcelorMittal were initially rejected on the grounds that they did not meet the eligibility criteria under Section 29. Then a second round of bids was invited, but by then both bidders were questioning the scrapping of the first round of bidding.
The issue got complicated further after JSW Steel entered the fray in partnership with Numetal in the second round, and Vedanta submitted a bid on its own. The NCLT’s decision last week to scrap the second round of bidding meant that JSW and Vedanta could not be bidders any longer.
“The lenders discussed the letter written by JSW Steel to participate in the bidding all alone if given a chance and this may have weighed on those who are in favour of rebidding,” said a source. “But there are some bankers who feel that this could delay the process further,” he added.
The CoC is expected to take the final call late on Tuesday or early Wednesday as it wants to get everything right this time, after the NCLT’s recent rap.
Both the existing bidders will get 30 days to rectify deficiencies and approach the CoC again if the decision is to go for a rebid. If all goes well, one of the bankers said, Essar Steel would fetch more than the defaulted amount of ₹48,000 crore.