(Bloomberg) -- ArcelorMittal has raised its bid for indebted Essar Steel India Ltd. to about 420 billion rupees ($5.8 billion), people with knowledge of the matter said.
The world’s biggest steelmaker recently sent a letter to Essar Steel’s lenders informing them of its new proposal, the people said, asking not to be identified because the information is private. The company has offered to repay all of Essar Steel’s secured debt, one of the people said. ArcelorMittal’s earlier bid was about 340 billion rupees, the people said.
The Luxembourg-based steelmaker on Tuesday confirmed it submitted a revised proposal and said reports speculating on the value of the new offer are “broadly accurate.”
An investor group including Russia’s VTB Capital had put in a second-round bid of 370 billion rupees, according to court documents. The VTB-backed consortium is partnering with India’s JSW Steel Ltd. for its proposal. Billionaire Anil Agarwal’s Vedanta Ltd. has offered near 350 billion rupees for the asset, the people said.
Essar Steel owes creditors about 508 billion rupees. It is one of a dozen large debtors that were ordered into bankruptcy court after India’s central bank got additional powers to speed up the process of winding down troubled companies.
ArcelorMittal, led by billionaire Lakshmi Mittal, is keen to expand in India as economic growth drives steel demand and producers scale up capacity. Essar Steel’s mill can produce 10 million metric tons of the metal annually.
ArcelorMittal said Monday it submitted a revised proposal to Essar Steel’s creditors that represents a “material increase” to its previous bids, without disclosing financial details.
An Indian court had asked ArcelorMittal to repay bad loans in group companies -- amounting to about 70 billion rupees -- in order to be an eligible bidder for Essar Steel. That would be in addition to the offer of 420 billion rupees. A court-mandated deadline to make the payment ends Tuesday.
A representative for Vedanta didn’t immediately respond to emailed queries. The resolution professional overseeing the Essar Steel sale didn’t immediately respond to a request for comment.
In the latest twist, ArcelorMittal has filed a petition with India’s Supreme Court seeking more time to deposit the 70 billion rupees. The Supreme Court has agreed to hear the plea on Wednesday. The steelmaker is also appealing a decision, made by the National Company Law Appellate Tribunal, on the eligibility of other Essar Steel bidders.
ArcelorMittal wants confirmation from Essar Steel’s lenders that it has won the bidding before paying off the bad loans as ordered by the court, one of the people said. A representative for ArcelorMittal didn’t immediately respond to a request for further comment.
©2018 Bloomberg L.P.
RECOMMENDED FOR YOU
POPULAR