The tussle to acquire stressed asset Essar Steel seems to be drawing to a close, with ArcelorMittal emerging as the highest bidder after Numetal fell out of contention on grounds of ineligibility, and dark horse Vedanta’s offer to increase its bid came a little too late.

According to sources, ArcelorMittal has offered to pay the lenders ₹42,000 crore. The company had recently agreed to pay ₹7,469 crore to clear the dues of erstwhile subsidiaries UttamGalva Steel and KSS Petron in which it had held a substantial stake.

Questions remain

But the question is whether ArcelorMittal has cleared the eligibility hurdle. Having agreed to pay off Uttam Galva’s debt in full, ArcelorMittal is now looking to take over Essar Steel. Earlier, the Lakshmi Mittal-owned company had divested its 29 per cent stake in Uttam Galva to become eligible to bid for Essar Steel. Uttam Galva has cold rolling capacity of 1.2 million tonnes per annum.

The two-week deadline given by the Supreme Court for both ArcelorMittal and Numetal to become eligible by paying off the debt of associate companies ended on Thursday.

Anil Agarwal-owned Vedanta, which had bid ₹36,000 crore in the first round, said it was willing to increase the bid, said sources.

Meanwhile, the Supreme Court will on Monday decide whether to admit VTB Bank’s petition to go it alone for Essar Steel asset. VTB Bank is the lead partner in the Numetal consortium, but their links with Essar Steel’s erstwhile promoters has raised questions about their bid’s eligibility.

In the case of Numetal, it had to shell out ₹38,000 crore to clear Essar Steel’s dues, given the presence of Rewant Ruia, the son of Essar Group promoter Ravi Ruia. But with a bid of ₹42,000 crore, ArcelorMittal beat Numetal’s offer.

The history

The battle for Essar Steel assets has seen many twists since the company was put under the insolvency process last year. It was the first test case of whether a defaulting promoter should be allowed to bid or not. The lawmakers decided against it, which put Numetal's out of the race, given Rewant Ruia’s stake in the company. This came to haunt Numetal in the final analysis because even though Ruia had sold his stake, the Suprme Court saw his initial capital money in Numetal as problematic.

ArcelorMittal, on the other hand, has been taking proactive measures to ensure that its bid remained in contention. It had initially bid ₹32,000 crore, but raised it significantly to emerge the top bidder. Initially it had resisted demands to pay the debts of Uttam Galva and KSS Petron, but eventually ArcelorMittal did agree to settle them in full.

Vedanta did not have any eligibility issues, but it did not bid aggressively for Essar Steel until recently. But by then the lenders had almost made up their minds to pick ArcelorMittal.

The other bidder that had evinced interest was JSW Group. The Sajjan Jindal-backed company had thrown its weight behind Numetal, but that turned out to be a lost cause once the apex court questioned Ruia’s links.

JSW had considered putting in a solo bid, but later it turned its interest in favour of Bhushan Power and Steel, where it emerged the top bidder.