Electrosteel’s lenders decide to support offer by Vedanta

The lenders of Electrosteel Steels (ESL) on Thursday decided to go ahead with the Anil Agarwal-led Vedanta’s bid following a six-hour meeting here in the city.

The Dalmia’s-owned Renaissance Steel had challenged the eligibility of Vedanta along with Tata Steel under clause 29A of the Insolvency and Bankruptcy Code (IBC), 2016, after Vedanta became the highest bidder (H1) for ESL.

The SBI-led consortium of 29 banks may issue a letter of intent (LoI) to Vedanta next week. The lenders’ decision is likely to be conveyed to the National Company Law Tribunal (NCLT) during its next hearing on Monday. The total exposure of the lenders in ESL is around Rs 11,300 crore.

Sources in Renaissance Steel said it is still not convinced about the eligibility of Vedanta according to the IBC clause. However, it is yet to take a call on its next move.

The resolution professional (RP) in the ESL insolvency case, Dhaivat Anjaria — who is a partner at PwC, submitted on Thursday an explanation as to why he felt Tata Steel and Vedanta were eligible for the bid along with the response of Renaissance Steel.

The NCLT had directed on March 20 the RP to give a copy of his decision to make Vedanta H1 along with the reason as to why he felt that the Anil Agarwal firm and Tata Steel are eligible for bidding. NCLT had also asked the RP to submit a copy of his decision along with the objections from the Dalmia group firm to its committee of creditors (CoC). Sources said, “Now CoC has to take a view. The next hearing for this case is due on April 2.

Prior to that, creditors have to form an opinion.” The Dalmia-led company alleged that both Vedanta and Tata Steel were not eligible to bid for the company under clause 29A of the IBC as one provision of this section says any company which has executives who have been convicted for any punishable offence with imprisonment of two years or more under the Companies Act would not be eligible to apply. The Dalmias have claimed that both companies — Vedanta and Tata Steel — come under this criterion.

The ongoing controversy could have impacted other bids of Tata Steel and Vedanta where they are frontrunners or are participating. Vedanta was declared the H1 at the Electrosteel Steels bidding, while Tata Steel was declared the highest bidder for Bhushan Steel. They are also in the fray for assets of Essar Steel. The liquidation value of Electrosteel Steels is Rs 2,900 crore.

Source: TNN