India's bad bank NARCL offers Rs 228 cr for Mittal Corp debt held by PSBs

Government-promoted bad bank National Asset Reconstruction Company (NARCL), through its newly formed ARC has made an offer for loans of troubled steelmaker Mittal Corp, a move that has triggered a Swiss challenge auction. The bad bank has offered Rs 228 crore for Mittal Corp debt held by public sector banks (PSBs), reported The Economic Times (ET) on Tuesday. 

The offer equates to a recovery of 16 per cent of the total amount of Rs 1,414.5 crore. 

The NARCL will have the right to match any counteroffers, as the lenders have put the debt on the block. 

Around 89 per cent of the outstanding debt of Mittal Corp is accounted to state-owned banks, while the rest 11 per cent, around Rs 173 crore, is held by Asset Care & Reconstruction Enterprise (ACRE), an ARC backed by Ares SSG Capital, the report stated. 

NARCL's offer for Mittal Corp, which is currently undergoing insolvency proceedings, will be around Rs 256 crore including ACRE's claims. The bad bank's anchor offer includes 15 per cent as cash payment and the balance in form of security receipts (SR) guaranteed by the government.

According to the ET report, lenders have invited expressions of interest by October 6, and the Swiss auction is on October 20. PSBs expect at least two counterbids at the Swiss auction, sources told ET.

Any counterbid at the Swiss auction would have a markup of at least six per cent over the anchor offer, at Rs 242 crore, in form of cash, or a combination of cash and SR, lenders have stipulated, reported ET. 

While NARCL's offer for Mittal Corp's entire debt is Rs 256 crore, Rimjhim Ispat Ltd has offered Rs 282 crore. Other bidders include Jindal Stainless Steel, which has offered Rs 251 crore, and Shyam SEL, which had offered Rs 257 crore.