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Essar Steel sale: JSW Steel may step in fresh round of bidding

If JSW Steel enters the new round of bidding for Essar Steel, it will be the fourth distressed steel asset that the Sajjan Jindal-led company has set its eyes on since the debt resolution process under the insolvency and bankruptcy code began.

business Updated: Mar 22, 2018 17:59 IST
Swaraj Singh Dhanjal
Swaraj Singh Dhanjal
Livemint, Mumbai
Essar Steel sale,Essar Steel auction,JSW Steel
JSW Steel’s entry depends on whether Essar Steel lenders will allow new bidders to participate in the fresh bidding process.(Reuters File)

JSW Steel Ltd may bid in Essar Steel auction after lenders to the bankrupt steel maker rejected the two bids that had been received and invited fresh bids for the distressed asset, two people aware of the company’s plans said.

On Wednesday, the committee of creditors (CoC) to Essar Steel at its meeting rejected the resolution plans submitted by steel major ArcelorMittal India and Numetal Mauritius.

Essar Steel is now headed for a new round of bidding, opening up the possibility for newer bidders such as Sajjan Jindal-led JSW Steel to enter the fray.

However, according to the first person cited above, JSW Steel’s entry is contingent on the committee of creditors allowing new bidders, who had not participated in the expression of interest (EoI) phase, to participate in the new bidding round.

“While JSW Steel is keen to enter the new round of bidding, they need clarity on whether the lenders will allow new parties to bid, those which had not submitted an EoI when the current round of bidding had started. The lenders are right now divided over this issue,” he said.

The committee is expected to meet in a day or two to take a call on this, he added.

Five firms had submitted resolution plans for Essar Steel.

Apart from ArcelorMittal and Numetal, the other firms which participated in the first round of bidding were Nippon Steel, Tata Steel and Vedanta Group.

Emails sent to JSW Steel did not elicit any response until press time.

If JSW Steel enters the new round of bidding for Essar Steel, it will be the fourth distressed steel asset that the Sajjan Jindal-led company has set its eyes on since the debt resolution process under the insolvency and bankruptcy code began.

JSW Steel has partnered with at least two private equity funds, Aion Capital and Bain-Piramal fund, to bid for distressed steel assets.

PTI reported on 6 March that a final decision on the lone bid for debt-laden Monnet Ispat and Energy Ltd by JSW-Aion will be taken within a fortnight.

JSW-Aion had submitted a binding bid for Monnet Ispat on 23 December. The JSW-Aion offer has been approved and the lenders have sent it for legal vetting the fate of which is likely to be decided within 15 days, the PTI report said.

JSW Steel had also submitted bids for Bhushan Steel Ltd and Bhushan Power and Steel Ltd. In case of Bhushan Steel, JSW lost out to Tata Steel Ltd, which has been declared the highest bidder.

Mint reported in November that JSW Steel is looking to set up a platform for acquiring distressed assets and is open to various options, including partnering with financial sponsors as it looks for inorganic growth and opportunities in the distressed assets space where a number of large steel companies are facing bankruptcy.

On 12 March, Mint reported that JSW Steel is tapping overseas bond investors to raise $1 billion to fund its plan to buy distressed assets in India.

JSW Steel has appointed investment banks JP Morgan, Citigroup and Deutsche Bank to manage the fund raising, Mint reported.

First Published: Mar 22, 2018 16:16 IST