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Indian Court Grants Russia’s VTB Capital-Backed Numetal to Bid for Essar Steel

© Photo : VTB CapitalVTB Capital
VTB Capital - Sputnik International
Since October 2017, multi-national firms have been vying to acquire Essar Steel, which can produce 10 million metric tons of the alloy annually. Essar Steel has an outstanding loan of around $7 billion and has defaulted on several occasions prompting India’s financial regulator to order bankruptcy proceedings.

New Delhi (Sputnik) — The Supreme Court of India on Thursday granted one more opportunity to ArcelorMittal and Russia's VTB capital-backed Numetal to submit revised resolution plans to acquire India's debt-ridden private firm Essar Steel. The revised resolution plan to acquire the 10 million-tons-a-year plant will be submitted in eight weeks. In 2016, Essar group sold its oil business to Russian firm Rosneft in a $13-billion deal.

After the direction of the Reserve Bank of India, the lenders of Essar Steel had initiated insolvency proceedings for recovery of around $7 billion in dues.

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ArcelorMittal and Numetal have opposed each other's eligibility under section 29A of the insolvency rule formulated by the Indian government that bars willful defaulters/defaulter promoters from bidding. Both firms have already taken part in two rounds of bidding.

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In the initial round of bidding, ArcelorMittal had argued that Numetal Ltd group had violated the insolvency rule as it included a company that was backed by the son of one of Essar's founders. VTB-led Numetal was disqualified for bidding in the second round by National Company Law Appellate Tribunal (NCLAT) while ArcelorMittal's bid was canceled as it was found that the company had stakes in a bad loan account.

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On September 7, NCLAT upheld Numetal's bid of around $5.5 billion (INR 37000 crore) in the second-round and directed ArcelorMittal to clear dues for Uttam Galva and KSS Petron, worth around $1 billion (INR 7000 crores) in three days. Three days later, ArcelorMittal went before India's apex court against the NCLAT order. Numetal had opposed the NCLAT order and said that it was wrong to allow ArcelorMittal to pay dues after bidding.

A two-judge bench comprising Justices RF Nariman and Indu Malhotra on Thursday allowed both firms to bid for the company provided they clear debts with stakeholders according to the insolvency rule.

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