NARCL's bid for Mittal Corp is of Rs 228 crore

4 Oct 2022 , 09:57 AM

With the newly established ARC placing a bid for debts of struggling steelmaker Mittal Corp., triggering a Swiss challenge auction, the sale of non-performing assets (NPA) to National Asset Reconstruction Company (NARCL), the government-promoted bad bank, has finally begun.

News reports said that NARCL has made an offer of Rs228 crore for the debt owed by Mittal Corp. to public sector banks (PSBs) totalling Rs1,414.5 crore. This translates into a 16% recovery for these lenders.

The debt has been listed for sale by the lenders. The right to match any counteroffers is reserved by NARCL.

Nearly 89% of Mittal Corp.’s existing debt is held by state-owned banks, and the remaining 11%, or Rs173 crore, is held by Asset Care & Reconstruction Enterprise (ACRE), an ARC supported by Ares SSG Capital. If NARCL’s offer takes ACRE’s claims into account, it will come to Rs256 crore. Its main proposal consists of a cash payment of 15% and government-guaranteed security receipts (SR) for the other 85%.

According to the bid document released by their process consultant PNB Investment Service, lenders have requested expressions of interest by October 6, and the Swiss auction is scheduled for October 20.

According to the reports cited above, the banks anticipate at least two counterbids at the Swiss auction.

The total amount of the offer from NARCL, which comes to Rs256 crore, is substantially less than the Rs282 crore offer made by Rimjhim Ispat for Mittal Corp, which is presently the subject of insolvency proceedings.

After a plea was submitted by Shyam SEL & Power, another bidder in the competition, pledging an improved offer, the National Company Law Tribunal (NCLT) ordered lenders to halt voting on resolution plans midway and seek new offers. A challenge to the NCLT’s decision has been filed by Rimjhim Ispat and Jindal Stainless Steel, two additional bidders for Mittal Corp under the insolvency process.

At the auction, Jindal Stainless Steel offered Rs251 crore, while Shyam SEL offered Rs257 crore.

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