Bidding war escalating for Essar Steel & Bhushan Steel

2017-11-18

Nov. 18, 2017 - Times of India reported that bidders have intensified efforts to place takeover bids for Essar Steel and Bhushan Steel, debt laden companies under the Insolvency and Bankruptcy Code proceedings.

Essar Steel – While eight suitors, including ArcelorMittal, Tata Steel, Vedanta, SSG Capital, AION, Steel Authority of India and Nippon Steel & Sumitomo Metals, had submitted expression of interest and collected preliminary information from Essar Steel, the race is essentially among ArcelorMittal, Tatas and the promoter Ruia family, which is partnering second-largest Russian bank VTB to retain an asset with 10 million tonne capacity and INR 42,000 crore debt.

Bhushan Steel - The fray of serious bidders is wider with a consortium of JSW, Piramal and Bain Capital, in addition to Tata Steel, Vedanta, Posco, ArcelorMittal etc, also emerging as a strong contender. The promoter Singal family is likely to make efforts to keep the integrated steelmaker with 5.6 million tonne capacity and about INR 45,000-crore debt.

There has been intense lobbying in recent weeks to disallow defaulting promoters from re-acquiring assets with a haircut on the lenders. However, promoters like Ruias and Singals would argue that they were done in by a sectoral downturn caused by cheaper Chinese exports and global overcapacity.