Sajjan Jindal-controlled JSW Steel has written to the committee of creditors (CoC) of Essar Steel on inviting fresh bids for the bankrupt firm. This has come ahead of the meeting of the CoC on Tuesday. About a month ago, JSW Steel had written to the committee, expressing its interest in taking part in bidding for Essar Steel.
However, the CoC had decided not to invite fresh bids owing to time constraints.
The CoC, after rejecting the first round of bids of ArcelorMittal and Numetal on grounds of eligibility under Section 29A of the Insolvency and Bankruptcy Code (IBC), decided to invite bids from only those whose expressions of interest (EoIs) had been shortlisted.
Six companies had submitted EoIs for Essar Steel. JSW Steel, which was focusing on bidding for assets in eastern India, had stayed away.
At the CoC meeting held on March 21, the way forward for Essar Steel was discussed. Two options were considered: To start a process of inviting bids from all interested parties, starting with issuing a new expression of interest and following up the entire process in accordance with a new request for proposal (RFP) approved by the CoC. The other was to extend the date for submitting resolution plans as defined in the RFP and permitting potential resolution applicants to submit new plans.
The second option got the CoC’s approval.
Sources close JSW Steel said, this prompted JSW to partner with Numetal. JSW Steel has joined as an investor in a step-down subsidiary of Numetal, called Nu Metal & Steel and Pvt Ltd. On Sunday, JSW told Business Standard that if a fresh round of bids was invited, it planned to go alone.
JSW Steel's letter mentions that the second round of bids should be rejected by the CoC because Numetal was ineligible and ArcelorMittal would have to pay huge dues. So this process too could end up being time-consuming.
The resolution professional had found Numetal's bid to be ineligible and the Ahmedabad Bench of the National Company Law Tribunal (NCLT) did not wish to substitute its view. On ArcelorMittal, the tribunal observed that mere sale of shares and declassification would not absolve the company from responsibility. However, it asked the CoC not to be influenced by court observations.
JSW's pitch for a fresh round of bids is based on the premise of maximisation of value. JSW Steel told Business Standard on Sunday that if a fresh round of bids was invited by the CoC, the company would go alone.
JSW is also citing a part of the NCLT order, which says “in the option no. 1, it has been suggested to initiate a new process for inviting bids from all interested parties (starting with initiation of new expression of interest) and follow the entire process as per new request for proposal as approved by the CoC, which were not considered as viable and appropriate by the CoC keeping in view of the time constraint, while in our humble view to be more sound reasonable and legally transparent... therefore, we feel while remanding back the matter to the CoC for reconsideration of the resolution plan and resolution applicant, to look at option 1 as per the deliberation made in the CoC meeting dated March 21, 2018…”.