The imperfect buyer

6 March 2018 By Una Galani Follow @ugalani

Essar Steel could fetch $6 bln, with bids from groups led by ArcelorMittal and Russia’s VTB. Both suitors sit awkwardly with tough rules barring defaulters from buying stressed assets. However, it is better to get good proceeds for creditors than to be purist and fail.

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ArcelorMittal, the world's largest steelmaker, on March 2 said it would form a joint venture with Japan's Nippon Steel & Sumitomo Metal Corp to bid for bankrupt steelmaker Essar Steel India.

The company said it submitted a plan on Feb. 12 to India's National Company Law Tribunal, which deals with insolvency and company disputes, to bid for Essar Steel in partnership with Nippon Steel.

Essar Steel was one of a dozen of India's biggest debt defaulters that were pushed to bankruptcy court last year by an order from the central bank.

Kosei Shindo, president of Nippon Steel, told reporters in Tokyo that ArcelorMittal will take a majority stake in Essar Steel, but should not be much higher than Nippon Steel's interest, declining to give further details.

A separate bid was submitted by Numetal, a consortium led by Russia's VTB. One minority shareholder is Rewant Ruia, the son of Essar Group Vice Chairman Ravi Ruia. In an interview with Mint newspaper, VTB said other shareholders were prepared to buy out Ruia if needed.

India's insolvency code bars owners and associates of defaulting firms from bidding for stressed assets.

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