ArcelorMittal Emerges as the Preferred Bidder for Essar Steel Assets

SEATTLE (Scrap Monster): ArcelorMittal-the Luxembourg-headquartered multinational steel manufacturing corporation emerged as the preferred bidder for the debt-laden Essar Steel assets in India.

The Committee of Creditors (CoC), who was tasked with the resolution process, announced that the joint venture of ArcelorMittal and Japan’s Nippon Steel and Sumitomo Metal Corp. was selected as the highest bidder for the troubled steelmaking assets. ArcelorMittal will now carry out further negotiations with CoC on the final bid price, which will be announced over the next few weeks. The final bid requires 66% votes in favour.

Three companies-ArcelorMittal, Vedanta Resources and Numetal were in the race till the final lap of the bidding process. As per apex court verdict, Numetal was required to pay INR 49,000 crores, as part of clearing Essar Steel’s overdue debts. With Numetal unwilling to pay dues, only ArcelorMittal and Vedanta were left in the race. Incidentally, ArcelorMittal had bid INR 42,000 crore, followed by Numetal with INR 37,000 crore and Vedanta with INR 35,000 crore.

Further to Supreme Court ruling, ArcelorMittal had recently approved a payment of INR 7,469 crores to the financial creditors of Uttam Galva and KSS Petron as part of clearing overdue debts, so as to make the bid eligible for COC’s consideration.

The entry of the world’s largest steelmaker into the high growth Indian steel market is expected to boost competition among private steelmakers in the country. According to World Steel Association estimates, Indian steel demand is expected to surge higher by 7.5% in 2018 and by further 7.3% in 2019.