JSW Steel and undisclosed foreign investors have agreed to support the Ruia family in its effort to win back control of Essar Steel Ltd, two people in the know told Mint. The Ruia family had offered to repay Rs 54,389 crore of Essar Steel's debt of Rs 54,550 crore.
The Ruias’ offer, however, is not legally viable as India’s bankruptcy code bars promoters of insolvent companies from such bidding.
"If the Ruias succeed in convincing the court of their argument, I believe JSW will then come in as an equity partner," said one of the two people quoted above.
JSW will gain a lot in the domestic market even through partial control of the Essar steel mill, a 10 million tonne per annum plant. The move could put JSW far ahead of competitors such as Tata Steel Ltd and public sector firm Steel Authority of India Ltd.
“Allowing the Ruias to stay on gives JSW the added advantage of keeping ArcelorMittal out,” another person said. ArcelorMittal's bid for Rs 42,000 crore was approved by the bankrupt steel maker’s committee of lenders.
Meanwhile, the National Company Law Appellate Tribunal (NCLAT) has directed the Ahmedabad bench of the National Company Law Tribunal (NCLT) to pass an order on the insolvency case against Essar Steel (India) Ltd by 31 January. “We allow the designated authority (NCLT) to pass appropriate orders by the next date, failing which this appellate tribunal will decide,” said a two-member NCLAT bench.
In a separate development, private equity giant Blackstone Group and US-based investor Xander are in talks to acquire VG Siddhartha’s 4.4 million square foot tenanted office park in a deal estimated at about Rs 2,200 crore, The Times of India reported.
Global Village, located on a 110-acre campus outside Bengaluru’s IT corridors, counts among its clients Mindtree, Accenture and Mphasis, and fetches average rentals of Rs 40-50 per square feet.
Coffee Day founder Siddhartha’s is also expected to spark an M&A deal for Mindtree, where he is the largest shareholder.
By monetising the non-core assets of his diversified group, Siddhartha wants to reduce debt.
Separately, in a revival of fundraising plans, the Shriram Group is looking at share sales of investors and a fresh equity issue at Shriram Capital, both valued at as much as $2 billion (Rs 15,000 crore), The Economic Times reported.
Shriram Capital is owned by Ajay Piramal-controlled Piramal Enterprises, TPG, South Africa-based Sanlam Group and the Shriram Ownership Trust.
Shriram Capital and IDFC Bank tried to merge last year, but in vain. After that, shareholders of Shriram Capital considered joining up the latter with Shriram Transport Finance Company and Shriram City Union. The move would have resulted in the listing of Shriram Capital, because Shriram Transport Finance Company is a listed firm.