ArcelorMittal bids Rs4,800 cr for Essar Power's Mihan plant

ArcelorMittal SA, the world’s largest steelmaker, has bid Rs4,800 crore to acquire Essar Power Ltd’s Mahan power project, reports citing sources at Power Finance Corp (PFC), one of the creditors, said. The offer is 37 per cent more than the Rs3,500 crore that promoters of Essar had offered as a one-time settlement for the Mahan plant.

The offer comes to Rs4 per mega Watt for the 1,200 mega Watt (MW) power project in Mihan, Madhya Pradesh,PFC chairman and managing director Rajeev Sharma said. 
The project has outstanding debt of about Rs7,500 crore, he added. Lenders, besides the lead lender ICICI Bank Ltd, include Punjab National Bank, Rural Electrification Corp (REC) and Power Finance Corp.
“The project does not have power purchase agreements (PPA) and fuel supply agreements (FSA). We had received an offer for OTS of Rs3,500 crore, but now, we have received an offer from ArcelorMittal of around Rs4,800 crore," said Sharma.
"We are considering the ArcelorMittal proposal because there is a difference of almost Rs1,300 crore. It is a good offer at Rs4 crore per MW," Sharma said, adding that the prevailing rate for setting up a new power plant is Rs6 crore per MW.
PFC has a loan exposure of Rs1,000 crore in the project.
He said lenders led by ICICI Bank will soon meet to take a call on the ArcelorMittal offer. 
The Mahan plant is still outside the purview of the National Company Law Tribunal (NCLT). The tribunal is yet to admit the case, after the Supreme Court issued a status quo on insolvency proceedings against power companies under the Reserve Bank of India’s 12 February circular.
RBI had asked banks to draft resolution plans for defaulters within 180 days in cases where the exposure was above Rs2,000 crore. Subsequently, several petitioners, including GMR Energy Ltd, RattanIndia Power Ltd, Association of Power Producers (APP), Independent Power Producers Association of India, Sugar Manufacturing Association from Tamil Nadu, and a shipbuilding association from Gujarat, moved various courts challenging the RBI circular.
ArcelorMittal had earlier bid for Essar Steel and EPC Constructions India Ltd, another Essar Group company, under the corporate insolvency resolution process.
While ArcelorMittal’s offer for EPC Constructions was rejected by lenders, its bid for Essar Steel is yet to be ratified by the NCLT, due to last-minute litigations. The resolution plan for Essar Steel proposed an upfront payment of Rs42,000 crore to lenders and an additional Rs8,000 crore towards capital expenditure.