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Banks to vote on new bidders for debt-laden Essar Steel on Friday

JSW Steel is likely to make a bid by joining a consortium of private equity players

Dev Chatterjee 

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The consortium of Indian lenders, led by State Bank of India, are set to vote on a proposal on Friday whether to allow new bidders for or not in the second round. If the voting goes in favour of allowing new bidders, then is likely to make a bid by joining a consortium of private equity players, said a source close to the development.

On Wednesday, the committee of creditors had rejected both the bids by and Numetal for the steel company as both failed to clear the legal eligibility test.

Corporate lawyers said by restricting bidding only from the six companies, which gave the expression of interest (EoI), the State Bank of India is restricting other bidders who may be interested in joining the race. As of now, only is opposing fresh bidders to join the race while other banks want the gates to be opened up for new players so that maximum value can be derived for

“It would have been better for CoC to widen the scope by inviting fresh bids from new parties particularly when other three bidders like Tatas, Vedanta and Nippon have not submitted any resolution plans after having shown EoI," said R S Loona, managing partner of Alliance Law.

Lawyers said SBI’s move to not allow fresh bidders will restrict competition and may lead to litigation and the entire process will be derailed. "The should make sure that the banks get the best offers. What is the guarantee that the other four players who did not bid in the first round will bid again in the second round? What has changed in the last few weeks?" asked a lawyer.

Apart from JSW, some private equity players are also interested in applying for and are looking for partners. With both and saying that they will bid again after rectifying their legal anomalies, Essar Steel bid can top over $6 billion. “Looking at the first round of bidding, expect Essar Steel to receive bids at higher than this amount,” said a banker. Both and are planning aggressive bids in the second round.

tried its luck by bidding for Bhushan Steel, Bhushan Power but it was outbid by Tata Steel by a wide margin. The company, however, has won the race for Monnet Ispat and it would be announced its winner in the next few days, said a source close to the development. Monnet will be the first that will successfully change its owner under the Insolvency and Bankruptcy Code, 2016. Monnet was part of twelve that were in the RBI’s first list for immediate debt resolution. Essar Steel was sent for IBC after the company defaulted on its Rs 440 billion of debt.

First Published: Fri, March 23 2018. 00:55 IST