7
KOLKATA: State Bank of India has deferred the sale of Essar Steel’s Rs 15,431 crore loans to February 11 on poor investor response even as the delay in company’s insolvency resolution process was criticised by ArcelorMittal, which has been declared the highest bidder by its lenders.
SBI, which has the largest exposure in Essar Steel, has said it took the decision on request of potential buyers.
The e-auction for the loan was earlier scheduled for January 30.
The country’s largest lender has now extended the deadline for putting up a bid to January 30.
Incidentally, the bank extended the deadline for inviting bids twice in last few days, first to January 23 from January 18, and now to January 30.
Essar Steel’s Committee of Creditors (CoC) had earlier approved a Rs 42,000-crore bid by ArcelorMittal.
However, Essar promoters the Ruias came back with an offer to fully repay its entire dues with a Rs 54,389 crore.
Apparently, the delay in the process prompted SBI to put the loan on the block.
ET in its edition dated January 24 had reported that SBI’s effort to sell Essar loans faces uncertainty, after the National Company Law Appellate Tribunal (NCLAT) directed the Ahmedabad bench of NCLT to pass an order on the insolvency resolution plan submitted by Essar Steel by January 31.
While investors were not particularly happy with the clawback option mentioned in the e-auction notice, which tells buyers to pay higher than the reserve price if the resolution happens in less than a year, the fixing of reserve price --at about 18% discount on ArcelorMittal’s offer of Rs 11,313 crore to SBI – has a number of raised eyebrows.
On Thursday, Bloomberg Quint reported ArcelorMittal president, Aditya Mittal as saying: “The same banks have a bid from ArcelorMittal and they're selling their debt at an 18% discount to our bid.
That’s a lot of wasted money.
India’s state-owned lenders are not rich enough for such a loss,” he said.
He was speaking on the side lines of the World Economic Forum at Davos.
The lender set the minimum reserve price for the loan at Rs 9,588 crore.
In an interview to CNBC TV-18 Aditya Mittal said the larger issue at stake is the insolvency resolution process which has now been going on for 540 days while the IBC suggests a maximum of 270 days.
The delay was costly since “state banks are losing Rs 17 crore per day,” he said.
Mittal joined the ongoing war of words on Essar Steel on Thursday saying if rules are not followed, the damage will be far wider than just the Essar Steel case.
“India has to be rule based; we must rely on the basic process of law.
These tactics are to delay, to frustrate and prevent the right resolution for the company,” Bloomberg Quint quoted him as saying.
While a provision in the bankruptcy code bars defaulting promoters of insolvent companies from taking part in the auction process, Sajjan Jindal, chairman of JSW group has said Essar Steel case is an exception and the promoters should be given a chance since they are willing to repay 100% of their dues.
