Essar Steel: 'We wanted to re-enter but are not eligible to bid again,' says Sajjan Jindal

Mumbai: JSW Steel is not eligible to participate in the re-bidding process for bankrupt Essar Steel as bankers have decided to allow only those who submitted expressions of interest for the first round of bidding, group chairman Sajjan Jindal said on Monday.

"We wanted to re-enter and give a good competition where bankers could have got more money; but they decided against it so we will not be bidding again," Jindal said.

"The committee of creditors told us that we are not eligible to bid for Essar Steel in the second round, as we werent part of the six companies that put up the EoIs in the first round," the head of the largest private sector alloy-maker told reporters.

The 10-million tonne Essar Steel, which owes more than Rs 45,000 crore to over 30 lenders, is the biggest asset on the block right now, and has been thrown open for rebidding after ArcelorMittal and Numetal were found to be ineligible on March 23 on technical grounds.

"We had written to the Essar Steel lenders making a case to enter the bidding process without a partner," Jindal further said on the sidelines of a press conference announcing a new facility in Texas with an investment of up to USD 500 million to make steel pipes and plates to serve the large oil and gas industry in the southern US state.

"Unfortunately, the bankers felt that if we were given an opportunity theyd have to advertise it in the newspapers and call for the bids again...people may have to call for the data centre to be opened which would further delay the process," Jindal said, adding, "but we told them we will not wait for all those formalities but will straight away submit the financial proposal. But was turned down."

Representational image. Agencies

Representational image. Agencies

While Numetal, floated by the PE arm of the Russian state-run lender VTB which owns the majority and Ravi Ruias son Rewant with 25 per cent stake, was declared ineligible due to the presence of the Ruia family member as a minority promoter, ArcelorMittal India also met the same fate because of its 29 per cent participation in Uttam Galva Steel which is also under insolvency now.

The Indian arm of the Luxembourg-based steel major, which is the worlds largest alloy maker exited Uttam Galva earlier this month and last week had also got the information published by the stock exchanges, the company claimed today.

In fact, Numetals and ArcelorMittals bids have been under a cloud after government had in December amended the Insolvency and Bankruptcy Code to stop defaulting promoters or their connected parties from bidding for insolvency assets.

Since then both the companies have challenged the bankers and RPs decision at the Ahmedabad bench of the NCLT which has advanced the hearing on the pleas on March 27 from April 4.

The rebidding for Essar Steel is now open till April 2 and only the original six are eligible to participate.

Jindal said they didnt participate in the earlier bid because they were busy with the bidding process for Bhushan Steel but were outbid by the Tatas.

On the proposed changes in the IBC code, under which the government plans to further amend Section 29A to allow related parties of defaulters without any management control, to bid for NCLT assets with prospective effect, he said unless the whole law is amended it would be unfair.

"If the whole law is amended to say that a defaulter is allowed to participate, then its fine. But if the defaulting promoter cures itself by selling shares, then its a mockery of system," Jindal said without naming ArcelorMittal which sold its stake in Uttam Galva during the resolution process.

Meanwhile, JSW Steel joint managing director Sheshagiri Rao said they have emerged as the final bidder for Monnet Ispat & Energy, the 270-days resolution process for which will expire in April.

"We are awaiting the final voting by the committee of creditors," Rao said.

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Updated Date: Mar 27, 2018 08:05:03 IST

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