Essar Steel Proposes Rs 54,389 Crore Settlement To Creditors

Essar Steel India said its board and shareholders have offered to pay Rs 54,389 crore ($7.42 billion) to creditors to settle their claims, allowing the company to exit from a bankruptcy process.

The steelmaker, owned by the billionaire Ruia brothers, is one of a group of companies that are among the country's biggest debt defaulters that were pushed into the bankruptcy court last year after a Reserve Bank of India (RBI) order that was aimed at clearing record bad loans at the banks.

Essar Steel's plan consists of an upfront cash payment of Rs 47,507 crore to all creditors, including Rs 45,559 crore to the senior secured financial creditors.

The company submitted a proposal to its creditor committee on Thursday for settlement of the entire claims of the financial creditors, operational creditors, workmen and employees of Essar Steel India.

The offer will lead to "full upfront recovery of loans for the lenders, and maximum recovery for all other classes of creditors", the company said.

The world's biggest steelmaker, ArcelorMittal SA, is forming a joint venture with Japan's Nippon Steel & Sumitomo Metal Corp to bid for the debt-ridden Essar Steel.

ArcelorMittal said last week that it would pay off creditors of two Indian firms, in which it previously held stakes, to bid for Essar.

($1 = Rs 73.2750)