Gold Silver Reports (GSR) – The Ruias on Thursday mounted a stunning last-ditch effort to retain the flagship Essar Steel within the family. Led by brothers Shashi and Ravi, they offered Rs 54,389 crore to lenders for settling all claims and allowing the company to exit the bankruptcy process. Indications are that they might be willing to go up to Rs 60,000 crore.
A number of bankers wondered why the Ruias didn’t make this offer earlier. “If they are in a position to pay now, then why not earlier? RBI rules state that if a borrower has the ability to pay and does not pay then it can be classified as a wilful defaulter,” said a banker.
ArcelorMittal said that “it has complied with the Supreme Court order, settled the overdues of Uttam Galva and KSS Petron, and has bank guarantees in place for the payment of Essar Steel”. The Supreme Court had directed ArcelorMittal to clear the Rs 7,469-crore arrears of non-performing assets — Uttam Galva and KSS Petron — in which it had held stakes before submitting a bid for Essar Steel.
Essar sources said ArcelorMittal was “misrepresenting” the process. They said that section 12A was introduced in June 2018 and included the cases which were beyond EOI (express of interest) stage, “A reasonable view can be taken that an opportunity should be given to all ongoing cases to withdraw from CIR (corporate insolvency resolution) process by giving full recovery to secured lenders.
Few lenders of Uttam Galva and related entities such as GPI Textiles and Gontermann Peipers (India) Ltd have not been paid and they are demanding from ArcelorMittal the payment of their overdues,” said a source.
We believe our current proposal will provide 100% recovery to secured creditors and lenders and maximum recovery for unsecured creditors. This is well in excess of that offered in the proposal under consideration and is in line with value maximisation, which is the underlying principle of the bankruptcy process,” Ruia said.
Essar Group’s director Prashant Ruia said the steel company got into difficulty because of external factors. “The value and quality of the asset can be ascertained from the interest shown and value offered by all the global steel majors… In fact, even after the onset of the insolvency resolution process, the shareholders of Essar Steel had made offers to settle the debt of the company, but the lenders did not accept them. – Neal Bahi Reports