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SBI to sell Essar Steel’s NPAs worth 15,000 crore to recover dues

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SBI plans to sell over Rs 15,000 crore worth bad loans belonging to Essar Steel to recover its dues from the debt-laden steel maker.

State Bank of India (SBI) invites expression of interest (EoI) from banks/ARCs/NBFCs/FIs for the proposed sale of its non performing financial asset with total dues of Rs 15,431.44 crore, the bank said in an advertisement.

The lender has put the reserve price for the recovery of bad loans from Essar Steel India at Rs 9,587.64 crore. SBI said that the resolution plan for the recovery of non-performing asset (NPA) has been approved and filed in NCLT Ahmedabad, according to which the minimum recovery to the bank is Rs 11,313.42 crore. The reserve price of over Rs 9,587 crore is on the basis of net present value (NPV) of minimum recovery discounted at 18 per cent with a time factor of one year.

SBI has asked the interested ARCs/ banks/ NBFCs/ financial institutions (FIs) that they can conduct due diligence of the asset with immediate effect, after submitting EoI and executing a Non-Disclosure Agreement (NDA) with the bank. The sale of the NPA account is to happen through e-auction on January 30, as per the bid invite.

In September last year, SBI had withdrawn the process of sale of debt of Essar Steel to asset reconstruction companies (ARCs) after NCLAT asked lenders of the debt-ridden firm to consider the second round bid of Numetal and mining baron Anil Agarwal-led Vedanta.

Essar Steel, which runs a 10-million-tonne steel mill in Gujarat, owes more than Rs 49,000 crore to over two dozen banks led by SBI and has been under bankruptcy proceedings. As per the resolution plan submitted by ArcelorMittal, Rs 42,000 crore will be paid to the secured lenders, while an additional Rs 8,000 crore will be pumped into the company as working capital.

ArcelorMittal’s offer to take over the bankrupt Essar Steel was accepted by the committee of creditors (CoC). Essar Steel Asia Holding, the holding company of Essar Steel that was controlled by the Ruias, had also proposed to the CoC, led by SBI, to pay an upfront Rs 54,389 crore to retake the management of Essar Steel.

Last week, the Ahmedabad bench of NCLT reserved its verdict on the maintainability of the bid by Essar Steel Asia Holdings to retake the management of the company.


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