JSW Steel has sought a fresh round of bidding from the debtladen steel major Essar Steel’s Committee of Creditors (CoC).
JSW’s move comes a day ahead of a crucial CoC meet scheduled on Tuesday. It is significant as it indicates that the Sajjan Jindal company that joined the Russian VTB Bankled Numetal consortium in the second round, is keen to enter the fray for Essar on its own.
In a letter sent to Essar Steel lenders, State Bank of India , ICICI Bank and Punjab National Bank on Sunday evening, JSW Steel said its main contention for seeking new round of bidding rests on maximising value and widening the fray, people with knowledge of the matter said.
What seems to have bolstered JSW is the observation by the NCLT (National Company Law Tribunal) Ahmedabad judge that a fresh round of bids as suggested by Essar Steel RP to the CoC in a meeting on March 21, with new expressions of interest and a new RFP within a limited time frame would be sound reasonable and legally transparent in light of amendments to Section 29.
Three weeks ago, JSW Steel had approached the RP for Essar Steel before the second round of bids evincing interest to bid. However, the RP did not allow it to bid since the second round of bidding was restricted to those applicants who had submitted expressions of interest in the first round.
“The NCLT judge’s observation reiterates our view on this matter.
Calling a fresh round of bids would also allow lenders to get a better value,” said Seshagiri Rao, joint MD of JSW Steel told ET.
The 270-day period for resolution under IBC rules was due to end on April 29 for Essar Steels. However, it has been stretched by almost a month as the NCLT judge allowed it to be extended by as many days as the matter had been in court between March 20 and April 19, 2018.
The NCLT directed the resolution professional (RP) to place before the CoC the first round of bids from Numetal and ArcelorMittal .
However, it is up to the CoC to give Numetal and ArcelorMittal 30 days to rectify their bids or invite a fresh round of bids.
The CoC is also likely to deliberate on whether ArcelorMittal will be eligible after it got declassified as a promoter in Uttam Galva and KSS Petron.
The NCLT observed that ArcelorMittal will have to pay overdue amounts to lenders on account of Uttam Galva Steels and KSS Petron to become eligible.
“Mere sale of shares and declassification as promoter after the companies have gone into default cannot absolve them of responsibility,” the NCLT observed.