Essar Group, owned by the Ruia family, has announced that it would deleverage around Rs 1.25 trillion of its debt if its offer to repay Essar Steel lenders in full is accepted. Sources close to the matter informed that the total deleveraging of Rs 1.25 trillion represents more than 85 percent of the group’s overall liabilities.
As per records, the Committee of Essar Steel Creditors had picked the Rs 420 trillion takeover bid by the world’s largest steelmaker ArcelorMittal a week ago. The company promoter, Essar Group, had put forth a Rs 543.89 billion proposal to repay off all of the lenders’ dues, which the Committee did not prefer.
Sources said that Essar is planning to legally challenge the Committee’s decision as the group believes its offer would ensure lenders recover 100 percent of their dues, whereas accepting ArcelorMittal’s offer would result into lower recovery. Until now, Essar Group had utilized Rs 42 billion from the sale of Aegis US operations, Rs 720 billion accrued after selling Essar Oil to Russia’s Rosneft and partners, Rs 24 billion from sale of Equinox and Rs 20 billion from sale of Aegis for deleveraging group debt.
Essar had invested Rs 1.2 trillion between 2010 and 2015, which is the highest in recent years by any corporate, reports indicate. With these funds, it has built world-class energy, infrastructure and metals & mining assets, as well as services sector businesses. The group has insisted that banks who lent to Essar have not lost money and claims that over Rs 200 billion in interest has been paid to the lenders of Essar Steel.
Essar has transformed itself into a fund-led structure for ensuring better management of its vast portfolio of businesses, by investing long-term capital into companies and holding 100 percent stake in all its investments, the sources mentioned. The group has stated that the quality of assets it holds has been attracting aggressive bids from high valued players and will enable banks to recover dues without a substantial cut.
