The country's largest lender State Bank of India Wednesday said it has put on sale its entire exposure of Rs 15,431.44 crore to debt-ridden Essar Steel. The lender, which is selling its exposure on a 100 per cent cash basis, has kept the reserve price of Rs 9,587.64 crore, it said in an auction notice. The loans put on sale includes working capital loans, term loan, corporate loans, export performance bank guarantee (EPBG) and standby letter of credit (SLBC).
"The facility may be assigned in whole or in part and all the security in relation to the same will be transferred and shared pari-passu to the extent of the amount of facility assigned," the bank said. Essar Steel's resolution plan was approved and filed in NCLT Ahmedabad. The bank said as per approved resolution plan of ArcelorMittal India Private Ltd (AMIPL), the minimum recovery on these loans is Rs 11,313.42 crore. The reserve price of Rs 9,587.64 crore is on the basis of the net present value of minimum recovery discounted at 18 per cent, the bank said.
The lender has sought expression of interest of the assets from asset reconstruction companies (ARCs), banks, non-bank financial companies and financial institutions. Last year in October, a committee of Essar Steel creditors had picked ArcelorMittal to acquire the debt-laden company for over Rs 42,000 crore.
ArcelorMittal's resolution plan for Essar Steel included an upfront payment of over Rs 42,000 crore to settle the debt and a further Rs 8,000 crore of capital injection into the company to support operational improvement, increase production levels and deliver enhanced levels of profitability. A group of operational creditors and Essar Steel shareholders have challenged the CoC decision.
While operational creditors say ArcelorMittal offer does not include clearing all of their dues, Essar Steel shareholders want them to pay Rs 54,389 crore to clear all outstanding, including operational and financial creditors be considered. Essar Steel, which runs a 10-million-tonne steel mill in Gujarat, owes over Rs 49,000 crore to over two dozen banks led by the SBI and has been under the bankruptcy proceedings since last June.
(With inputs from agencies.)