Bidding To Win

While ArcelorMittal, Tata Steel and Vedanta draw plans to buy Essar Steel, the Ruia family, too, is looking for a backdoor entry. Can it succeed?

- Nevin John

IT WAS ASSUMED all along that Essar group director Prashant Ruia’s frequent trips to Moscow would conclude with the sale of Essar’s oil refinery business to Russian oil giant Rosneft. But there is more to it than meets the eye. The Moscow visits seem unlikely to end soon since the Ruias are now working towards forming a consortium with Russian bank VTB and Hong Kong-based SSG Capital Management to regain control of the debt-laden Essar Steel, put up for sale under the bankruptcy law. Essar Steel has over ₹43,000 crore of debt on its books.

As things stand, VTB and SSG are expected to contribute the lion's share of the funds required for the bid while the Ruias would most likely be minority shareholders in the consortium, say media reports. The move by the Ruias has captured the attention of the corporate world since it comes after the government amended the Insolvency and Bankruptcy Code (IBC) to prevent promoters of loan defaulting companies from regaining control without settling the overdue amount. It is clear that the Essar promoters will have to pay overdues, estimated to be between ₹6,000 crore and ₹7,000 crore – this includes interest and charges relating to non-performing asset accounts before the submission of the resolution plan. The deadline to submit bids for Essar Steel has been extended to February 12 from end-January after potential bidders sought more time to finalise their deal structure and funding arrangements.

A Crowded Race