The world’s largest steel manufacturer ArcelorMittal has offered a deal of 48 billion rupees equal to $673 million to take over the 1200-megawatt power plant of Essar in India. It is one of the most valued assets of a debt-driven company.
The deal for acquiring the Essar power plant for 48 billion rupees has made the CEO of ArcelorMittal, Lakshmi Mittal to stand against the Ruia family. The Ruia family is perhaps fighting the battle in order to prevent their most important steel assets from falling into the hands of ArcelorMittal, which is the global steel manufacturing company.
The ArcelorMittal bidding deal was announced on Monday by Rajeev Sharma who is the Chairman of PFC’s. The important creditor of the Essar power plant is Power Finance Corp Ltd which is a government-owned firm.
Sharma added that PFC had not made any decision on the offer for an asset, which is commonly known as the Mahan Power plant that has a debt of around 74 billion rupees.
To recover a loan of billions of dollars, many of Essar’s creditors are selling off their company’s assets which is enabling Essar Group to stay with little assets, whoever buys them.
Meanwhile, the Essar family had tried to acquire the 1200-megawatt power plant by placing a bid of 35 billion rupees but could not acquire it because of ArcelorMittal who placed a bid of around 37 percent higher than Essar family.
While during a press conference, Sharma informed that, the company had received an offer from the largest steel manufacturer company ArcelorMittal for 4 crores per megawatt, total equaling to 48 billion rupees.
On the issue of PFC decision, ArcelorMittal refused to comment; meanwhile, Essar Corp was not available to make any comment.
ArcelorMittal is considered as the most preferred company for bidding Essar Group’s important steel plant of worth 10 million ton located in Gujarat, and eventual is the only single bidder for other Essar part such as Essar’s infrastructure arm EPC Construction which is mostly known as Essar Projects.
If the deal is accepted of ArcelorMittal the largest steel company of the world to acquire the 1200-megawatt Mahan plant of Essar, then it is going to be a big blow to the Ruia family’s, who are trying to renegotiate the debt settlement process and to hold on to their assets.
Meanwhile, ArcelorMittal and Ruias both are fighting a legal battle over the destiny of the steel assets. The Final verdict is still pending in the court and is expected in the days to come.
Essar Power which is a division of an Essar group has already invested around 80 billion rupees in constructing the power plant; in 2018 the process was initiated and at present holds 50 percent of a stake of the Essar Group’s power generation.