Numetal to match ArcelorMittal's $5.8-billion bid for Essar Steel

A VTB Capital-led consortium has offered to match ArcelorMittal’s Rs 420-billion ($5.8 billion) bid for Essar Steel India, heating up the long drawn battle for the biggest steel mill being sold under the bankruptcy law. 

Numetal, the consortium led by VTB, is willing to revise its earlier bid of Rs 370 billion for the 10 million tonnes a year steel manufacturing unit, Mukul Rohatgi, the lawyer representing the company, told the Supreme Court on Thursday. 

At the same time, rival bidder ArcelorMittal must pay the Rs 70 billion its group companies owe to creditors to stay in the race, he said. The court is yet to take a decision.

Acquiring Essar Steel’s assets will give the buyer a sizable presence in a sector that is expected to benefit from India’s plan to invest trillions of rupees on roads, ports and airports. That’s prompted a prolonged legal challenge by bidders in multiple courts to prove their eligibility and delayed the sale. Essar owes creditors about Rs 507.8 billion.

On September 7, an appeals court had asked ArcelorMittal, the world’s largest steelmaker, to pay off dues in group companies — KSS Petron and Uttam Galva Steels — to be a valid bidder. 

The Supreme Court on Wednesday reserved its verdict on cross-appeals of Numetal and ArcelorMittal, challenging the National Company Law Appellate Tribunal (NCLAT) order on the eligibility of the UK-based firm for Essar Steel.

While ArcelorMittal had challenged the order asking it to pay Rs 70 billion to become eligible, Numetal had alleged that the NCLAT had “wrongly” applied legal provisions to enable its rival bidder to pay the dues of two debt-ridden firms even after it had bid for Essar Steel.

A Bench of Justices R F Nariman and Indu Malhotra reserved its verdict after counsel for all the parties, including the committee of creditors (CoC), concluded their arguments that continued for eight days. The court has said it would only decide the eligibility aspect and the other financial issues would be discussed by the CoC. Rohatgi said Vedanta, the third bidder, was not serious and has not appeared anywhere and there cannot be a situation where there was only one bidder.

Senior advocate Gopal Subramaniam, who represented the CoC, said that debt-ridden Essar Steel is a valuable asset and it did not want it to go for liquidation. The counsel for CoC sought eight weeks after the date of judgment to complete the negotiations and the bidding process for Essar Steel. 

“I am not appearing for Ruias. Numetal has nothing to do with Ruias,” Rohatgi said, adding that Numetal has made it clear by filing an affidavit before the resolution professional that it would not sell Essar Steel back to Ruias if it emerges a winner.

Earlier, the CoC had said the Supreme Court will have to lift the “corporate veil” to test the eligibility of ArcelorMittal and Numetal to ascertain the persons behind them. 

Rohatgi had said the two brothers of L N Mittal, Pramod and Vinod Mittal, have been associated with firms which were declared non-performing assets. ArcelorMittal had said that Numetal was not eligible to bid for Essar Steel on several grounds, including that it was a “shell company” created by a firm in which Essar group promoters had majority shares.