BUSINESS
Bankers question detachment of Rewant Ruia from Numetal’s bid for debt-laden steel firm
Bankers have questioned detachment of Rewant Ruia from Numetal's bid for the debt-laden Essar's Steel while insisting that the founder-promoter group of the steel company clear dues of close to Rs 1 lakh crore for which personal and corporate guarantees were furnished by Ravi Ruia and Prashant Ruia. These are dues for various loans taken to fund the group's debt. In order to be eligible, Essar has to clear all its dues by May 15.
Numetal (Mauritius), which is one of the bidders for Essar Steel, has Aurora Enterprises as one of the shareholders where Rewant Ruia, son of Ravi Ruia, has an interest.
A senior banker said, "Since the promoters have furnished personal guarantees and corporate guarantees, they need to clear dues which would be close to Rs 1 lakh crore. The guarantees should be honoured or else this will make them ineligible as Rewant is one among the bidders."
Rewant is the younger son of Ravi Ruia, who along with his brother Shashi, founded the Essar Group. Rewant also sits on the board of Essar Global Holdings Ltd and Essar Constructions (India) Ltd as director.
A Numetal spokesperson, however, argued that Aurora, which has a minority shareholding of 25% in Numetal, has no loan irregularities with Indian banks nor does it have any directorship or management control in the company.
A senior banker said, "The EMD for the bid was paid by Rewant Ruia, so creditors are wondering from where VTB Capital is going to get the money to fund the acquisition."
An email asking both Essar group and Numetal on how VTB Capital, a Russian investment bank, would fund the deal did not elicit any response. The issue of EMD being paid by Rewant also did not elicit any response.
A spokesperson for Numetal only preferred to say, "Numetal presented before the Committee of Creditors (CoC) that it is a fully eligible resolution applicant as per the IBC. Neither Numetal nor its shareholders have any loans overdue with any creditors in India. Aurora, which had minority shareholder interest with 25% equity in Numetal, neither had management role nor any right to directorship in the company. Neither Aurora nor its beneficiary has any loan irregularities with Indian lenders and banks. In any event, Numetal and other shareholders have already bought out Aurora's shareholding in the company. "
Numetal is led by Russia's VTB Capital, which is part of the VTB Bank of Russia. Arcelor Mittal and Nippon Steel combine is the other bidder interested in the state-of-the-art steel asset at Hazira in Gujarat.
Numetal (Mauritius) Ltd on Friday moved the National Company Law Appellate Tribunal (NCLAT) against an order by the Ahmedabad bench of National Company Law Tribunal (NCLT) that disqualified its bid for Essar Steel for being ineligible under Section 29 A of the Insolvency and Bankruptcy Code.
Numetal was disqualified on the grounds that Rewant Ruia, son of Essar Steel promoter Ravi Ruia, is the beneficiary of a trust that backed Aurora Enterprises, which in turn held about 25% stake in Numetal.
Numetal's appeal would be heard on May 17 along with the cross appeal filed by it and ArcelorMittal, the other disqualified bidder for Essar Steel.
On April 19 NCLT had rejected the first round of bidding for the company saying that the CoC and the resolution professional failed to follow the rules prescribed by the Insolvency and Bankruptcy Code (IBC). But the court had made it clear that both the bidders ArcelorMittal and Numetal must clear the debts of defaulting companies wherever they hold stakes so that they become eligible to bid under the IBC without any pending dues. ArcelorMittal will have to clear dues of Uttam Galva Steels and KSS Petron to become eligible, the combined liability of which is pegged at Rs 7,000 crore.
Last week, Numetal had challenged the same NCLT court order allowing rival ArcelorMittal to clear the dues of associate companies in order to become eligible to bid for Essar Steel. ArcelorMittal, on the other hand, had challenged its own disqualification from bidding in an appeal before NCLAT.
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