ArcelorMittal’s Bid for Essar Firm Rejected by Lenders

SEATTLE (Scrap Monster): The lenders to EPC Constructions India Ltd have rejected the bid offer from ArcelorMittal SA, citing that the offer is too low. Incidentally, ArcelorMittal had placed a bid at approximately 93% discount for the Essar Group firm. Following the rejection, fresh bids are being invited. According to a banker associated with the bidding process, fresh bids are now expected to be submitted by Tuesday.

ArcelorMittal had submitted a bid offer of INR 500 crore. The company had also offered to infuse some equity into the company. However, the lenders rejected the proposal, stating that the offer stands too low upon comparison with EPC Constructions’ outstanding loans amounting to INR 7,268 crores.

The steel giant’s original plan was to use EPC Constructions as an add-on to its purchase of Essar Steel, which got stuck by means of last-minute litigation. The insolvency case of Essar Steel is now being heard by the bankruptcy court in Ahmedabad. It must be noted that over 92% of creditors of Essar Steel had earlier voted in favor of handing over the bankrupt steel firm to ArcelorMittal. Afterwards, a group of operational lenders had challenged the decision to accept ArcelorMittal’s resolution plan.

EPC Constructions was referred to the bankruptcy court by IDBI Bank in April 2014 and was declared as a non-performing asset by end-2014. A demand notice was issued to the company in November last year.