ArcelorMittal seeks to buy EPC Constructions at 93pct discount - Report
Mint, citing two bankers aware of the bid, reported that ArcelorMittal emerged as the sole-bidder for Essar Group firm, EPC Constructions India Ltd, with a bid of INR 500 crore, against outstanding loans of INR 7,268 crore. The report quoted a banker as saying that the company has also promised to bring some equity into EPC Constructions if they win the bid, but lenders were not happy with the offer and want more cash upfront. He told “A discount of above 90% is not acceptable to them.”
The second banker, also requesting anonymity, said that the proposal will be discussed by the committee of creditors (CoC), but most banks feel if the bid was not revised, the company might have to head for liquidation. He added that their proposal to bring in equity is not attractive because it will still lead to a meagre recovery for the lenders.
A wholly-owned subsidiary of Essar Projects Dubai, EPC Constructions (formerly Essar Projects India Ltd) is involved in building infrastructure projects, power plants and refineries, among others. EPC Constructions was referred to the bankruptcy court by IDBI Bank and was admitted under the Insolvency and Bankruptcy Code (IBC) on 20 April. Banks had declared EPC Constructions a non-performing asset (NPA) on 31 December 2014, and had issued a demand notice on 8 November 2017, shows documents available with the National Company Law Tribunal (NCLT).
According to documents on EPC Constructions’ website, under the insolvency resolution process, the company has received financial creditor claims of INR 7,304 crore, of which the resolution professional has admitted INR 7,268 crore. Lenders having exposure to EPC Constructions include IDBI Bank (INR 1,117 crore), Central Bank of India (INR 1,054 crore), UCO Bank (INR 1,011 crore), Exim Bank (INR 884 crore), Corporation Bank (INR 722 crore) and Suraksha Asset Reconstruction Co (INR 42 crore). The highest claim of INR 1,753 crore was filed by the company’s parent, Essar Projects Ltd, Dubai. The claim is being verified.
Mint had on 30 October reported that ArcelorMittal had completed due diligence on EPC Constructions, using the data room open to bidders, while its officials had also visited the company’s plant in Surat.
Source : Livemint