Iron and Steel

Essar Steel Update: Lenders Choose Arcelor Mittal as Successful Bidder by Issuing Letter of Intent

Essar Steel Update: Lenders Choose Arcelor Mittal as Successful Bidder by Issuing Letter of Intent
Mining News Pro - After the reports that the flagship owners of Essar Steel, Ruias had offered a whooping INR 54,000 crore to settle all the claims of the company in order to allow the company to make exit from bankruptcy process under Section 12A of IBC (Insolvency and Bankruptcy Code), the latest update in the case is that Committee of Creditors (CoC) have chosen the preferred bidder, Arcelor Mittal (AM) as the ‘successful bidder’ to take over debt laden Essar Steel.
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According to Mining News Pro -After the reports that the flagship owners of Essar Steel, Ruias had offered a whooping INR 54,000 crore to settle all the claims of the company in order to allow the company to make exit from bankruptcy process under Section 12A of IBC (Insolvency and Bankruptcy Code), the latest update in the case is that Committee of Creditors (CoC) have chosen the preferred bidder, Arcelor Mittal (AM) as the ‘successful bidder’ to take over debt laden Essar Steel.

The CoC had issued letter of Intent (LoI) to the Arcelor Mittal and its partner Nippon Steel and Sumitomo Metal Corp, clearing all the confusion as who will be the new owner of Essar Steel.

ArcelorMittal has said that its resolution plan for Essar Steel, which the lenders auctioned to recover over INR 49,000 crore of unpaid loans, includes "an upfront payment of INR 42,000 crore" to settle debt and "a further INR 8,000 crore of capital injection into the company to support operational improvement, increase production levels and deliver enhanced levels of profitability".

The announcement potentially brings to a close a year-long tussle for one of the most attractive assets under the new insolvency process in India.

Essar Steel drew interest from Indian steelmakers such as JSW Steel and Vedanta Ltd and international companies and banks such as Russia`s VTB and ArcelorMittal.

The tussle between Numetal and ArcelorMittal went all the way to Supreme Court, which this month ruled that any bidders would have to settle all pending dues tied to any distressed assets they were associated with before they could bid for the steel plant.

ArcelorMittal announced last week that it had cleared the dues of Uttam Galva and KSS Petron, two other smaller defaulters that it was previously associated with, paving the way for it to acquire the Essar Steel asset.

Essar Steel, a 10 MnT steel plant in the western state of Gujarat, was among a dozen of India`s biggest debt defaulters that were pushed to bankruptcy court last year by a central bank order aimed at clearing a USD 147 billion mountain of bad loans.


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