MUMBAI: Numetal Mauritius, one of the two bidders for Essar Steel, has formally sought lenders’ approval to acquire a stake in Odisha Slurry Pipeline Infrastructure (OSPIL), which is integral to running Essar Steel and faces litigation over its ownership. Bankers are unlikely to accept this offer on the ground that the matter is in the courts.
Two senior officials aware of the development said that in a formal letter to lenders, Numetal Mauritius has sought their approval to acquire a majority stake in OSPIL from a fund owned by Srei Infrastructure. Numetal is a joint venture between Russia’s VTB Bank and Rewant Ruia, son of Ravi Ruia. The latter is the founder promoter of Essar Steel and is barred from bidding for the company unless he repays the dues.
In a proposal to lenders, Numetal has also said that it is willing to refinance the lenders who are not in favour of the transfer of stake, two senior officials told ET.
In an emailed response to ET, a spokesperson of Numetal said: “We have approached all the existing lenders of OSPIL for their consent for the proposed purchase in due course. We are confident that lenders will be happy to have us as the controlling shareholder after they have understood our proposal. In the event that they are not comfortable, we are prepared to assist the company in refinancing any dissenting lenders, in which case their consent will no longer be required.”
Essar Steel, which is facing bankruptcy proceedings, has received bids from Numetal Mauritius and ArcelorMittal. The debt laden steel company is facing claims of over Rs 49,000 crore from financial creditors and Rs 22,000 crore from operational creditors.
This offer by Numetal assumes significance in the backdrop of media reports that the legal advisors have deemed both the bids as ineligible. The resolution professional has denied such reports, saying that no decision on it is taken yet.
In less than a week before the resolution professional set the deadline for submitting bids, Numetal entered into a binding agreement to buy a stake in OSPIL from IndiaGrowth Opportunities Fund floated by Srei Infrastructure. Lenders immediately moved Delhi High Court objecting to the sale. The Delhi High Court restrained the fund owned by Srei Infrastructure from selling the stake in OSPIL to Numetal.
In absence of the pipeline, it would cost the new promoters an additional Rs 1,300-2,000 crore to transport some 10 million tonnes of raw material to its plant annually by rail or road. Separately, lenders are fighting a legal battle with Srei Infrastructure over the ownership of the OSPIL. Lenders say that the 253-km OSPIL, which transports iron ore from mines to a pellets plant in Paradip, is part of Essar Steel. Srei says that Essar Steel had hived it off as a company and sold it to Srei Infrastructure.