Source: The Economic Times
Two global steel giants — ArcelorMittal and Nippon Steel — are teaming up to jointly bid for bankrupt Essar SteelBSE 0.41 %, said two senior executives who did not want to be named. The asset is expected to go under the hammer in the second week of February.
ArcelorMittal and Nippon Steel had originally planned to submit independent bids for Essar Steel, which is among the five steel companies up for sale following RBI's directions to refer 12 companies to bankruptcy court in June last year. The other key contenders for Essar Steel are Tata SteelBSE 0.73 %, Vedanta Resources and the promoters of Essar, the Ruias, in partnership with Russia's VTB Capital.
Japan's Nippon Steel and billionaire Lakshmi Mittal-promoted ArcelorMittal decided to bid jointly for Essar last week, said the people cited above. "The final contours of the tie-up are being worked out. We don't really know the rationale for the tie-up as yet," said one of the persons.
ArcelorMittal declined comment on what it said was speculation. Nippon Steel couldn't be reached over the weekend and there was no response to an email.
PARTNERSHIP TO INTENSIFY BIDDING
"Nippon Steel has deep pockets but it does not have any presence in India and therefore partnering with those who are familiar with Indian regulations is comforting," said one of the persons. "For Arcelor-Mittal, partnership will add to the financial muscle needed for acquiring the company."
This partnership will intensify bidding for Essar Steel and result in lower haircuts for lenders. Essar Steel faces Rs 54,851 crore in claims from financial creditors and Rs 22,914 crore in claims from operational creditors. The five steel companies among the 12 are Electrosteel Steels, Bhushan Steel, Monnet Ispat and Bhushan Power & Steel besides Essar Steel.