Numetal Mauritius, which has Russia’s VTB Bank as the largest shareholder, has signed a binding agreement with India Growth Opportunities Fund floated by Srei Infrastructure to buy 70% equity in Orissa Slurry Pipeline India (OSPIL), in a deal that gives it an edge in the race for Essar Steel, put up for sale under Insolvency and Bankruptcy Code (IBC). OSPIL owns a 253 km slurry pipeline, which is a lifeline for Essar Steel, carrying iron ore from mines to its pellets plant in Paradip.
he race for Essar Steel — which faces claims of Rs 54,851 crore from financial creditors and Rs 22,914 crore from operational ones — has attracted top steel players including the likes of ArcelorMittal with Nippon Steel, Tata Steel and Vedanta Resources. All these firms are believed to have completed the due diligence. The deadline to submit bids is February 12, having extended from January 29 after potential bidders sought time to finalise structure and funding of their proposals.
Essar Steel had in May 2015 monetised its slurry pipeline. OSPIL, part owned by Srei Infrastructure, purchased it for a consideration of Rs 4,000 crore, and the funds were used to service dues of lenders to Essar Steel. The latter had in turn agreed to purchase 10 million tonne capacity on the pipeline for a payment of Rs 720 crore per annum. Essar Steel and OSPIL had subsequently entered into a pact to cancel the sale,which was subject to obtaining consents of shareholders and lenders, which never materialised.