Ruias offer Rs 47,507 crores hard cash to buy Essar off insolvency

Last Updated: Thu, Oct 25, 2018 18:51 hrs
Employees walk past an Essar Group logo outside their headquarters in Mumbai

Lead promoters of Essar Steel, a steel company that is battling insolvency proceedings, are wanting to pull their company from debts and regain their ownership.

The Ruias according to verified sources are reported as willing to pay an aggregate of Rs 54,389 crores that includes an offer of Rs 47,507 crores in upfront cash payment. This, the promoters hope would clear all lender' dues and pull the company back from insolvency proceedings.

The amount also includes Rs 45,559 crores in payouts to senior secured financial creditors. With this, Ruias explained that the financial creditors could make full recovery of their dues.

The committee of creditors associated with Essar Steel were informed of this during a takeover offer made by ArcelorMittal, among the world's largest steel market.

The company in a media announcement said, "The shareholders of Essar Steel have today (Thursday) submitted a proposal to the Committee of Creditors (CoC) for full settlement of the entire admitted claims of the financial creditors, operational creditors, and workmen and employees of Essar Steel India Ltd (ESIL), aggregating Rs 543.89 billion [Rs 54,389 crores], under Section 12A of the Insolvency and Bankruptcy Code."

"The CoC is empowered to consider and approve this Settlement Plan with the requisite voting share, on the basis of which the corporate insolvency resolution process against ESIL may be withdrawn," the statement said.

The offer is higher than the Rs 37,000 crores that NuMetal had bid for Essar's assets. It crossed the Rs 42,000 crores that Lakshmi Mittal's company ArcelorMittal had agreed to pay a month ago.

Essar Steel is not only a curious case, but also a compelling business sense for steel producers worldwide. Firstly with 10 million tonnes of production, Essar is a great investment bet for current steel companies such as Numetal (backed by Russian VTB and JSW Steel) and Vedanta.

With the steel industry reported to be in an upward trend, market players do not want to let go off any opportunity and that probably explains why Ruias are wanting to bring their company back from the insolvency proceedings.

Some interesting tweets and reactions:

More from Sify: