Essar Steel auction: Lenders vote to finalise ArcelorMittal's $5.4-bn bid

Arcelor has offered to make an upfront payment of about $5.4 billion to the banks

Lenders to Essar Steel India Ltd, the biggest mill being sold under the nation’s insolvency process, are voting Tuesday to finalize a bid from ArcelorMittal, people with knowledge of the matter said.

Arcelor has offered to make an upfront payment of about 395 billion rupees ($5.4 billion) to the banks, the people said, asking not to be identified because the information is private. The Luxembourg-based suitor later plans to pay the lenders about 25 billion rupees from Essar Steel’s retained earnings, according to the people.

Arcelor, controlled by billionaire Lakshmi Mittal, was chosen last week as the preferred bidder for Essar Steel after going through multiple rounds of bidding for the asset, which would give the world’s biggest steelmaker a foothold in India’s growing market for the alloy. Following legal challenges to the bidding process, India’s Supreme Court this month cleared the way for lenders to decide on a winner.

Bidding for Essar Steel, which can produce about 10 million metric tons annually, has been one of the most hotly contested under the nation’s new insolvency resolution process. The mill had drawn bids from billionaire Anil Agarwal’s Vedanta Ltd. and a VTB Capital-led consortium.

A representative for Arcelor declined to comment, while lead lender State Bank of India, and the resolution professional overseeing the Essar Steel sale didn’t immediately respond to emails seeking comment.

Once a bid is agreed upon by Essar Steel lenders and the resolution professional, the final plan will still need approval from Indian courts for the deal to be finalized.