NEW DELHI • India’s top court said both suitors for Essar Steel India Ltd can proceed with their bids for the insolvent company, provided they pay off certain debts in group companies within two weeks.
The Supreme Court in New Delhi effectively opened up a third round of bidding for Essar Steel between the world’s largest steelmaker ArcelorMittal, and Numetal, a consortium led by Russia’s VTB Capital.
In a blow to the latter bid, the court ruled that Numetal is a related entity to Essar Steel, and can only continue if it pays the Indian company’s debts.
For its part, Arcelor lost its plea to exclude the debts of group companies from its bid. Once the dues are cleared, a panel of Essar’s lenders have eight weeks to choose the best offer, the court said.
Both bidders had opposed each others eligibility in court. Last month, an Appeals Court asked Arcelor to pay off 70 billion rupees (RM3.94 billion) of dues in group companies — KSS Petron Pte Ltd and Uttam Galva Steels Ltd — in order to stay in the race for Essar.
Last week, Numetal said it is willing to match Arcelor’s offer of 420 billion rupees, heating up a battle for the asset that began in February.
Essar Steel, which can produce 10 million metric tonnes of the alloy annually, owes creditors about 508 billion rupees.
Arcelor had argued before the Supreme Court that the earlier verdict was wrong to insist on the payment of bad loans as a condition of its bid.
Arcelor said it had already sold its stakes in the non-performing companies before submitting its offer for Essar. — Bloomberg