NARCL declines to match Phoenix ARC's bid for Mittal Corp

Mumbai: The National Asset Reconstruction Co (NARCL) has declined to match Phoenix ARC's ₹405 crore bid for the bankrupt steel maker Mittal Corp, clearing the way for the Kotak Mahindra Bank-backed ARC to take over the debt-laden company, two persons aware of the negotiations said.

Phoenix's offer was 78% higher than the ₹228 crore from NARCL, and more importantly, it was on a full cash basis in contrast with the 85% security receipts (SRs) which would have been issued by NARCL to be liquidated and paid to banks only after recovery is made.

The substantial gain in value in the Swiss challenge round for just the second asset bid by NARCL has made bankers confident of more success in the future.

"The offer from Phoenix is really good, both in terms of the quality and the amount. Since NARCL has conveyed that it does not want to pursue it, banks will now move forward to hand over control to Phoenix," said one of the persons aware of the negotiations.

NARCL CEO Natarajan Sundar did not respond to an email seeking comment.

Lenders had called for competing bids to beat the ₹228 crore offer from NARCL in early October. Last week, ET reported that Phoenix's offer was higher than the ₹392 crore given by Prudent ARC.

Under the Swiss challenge auction mechanism, the anchor bidder has the right to match or beat the offers in the second round.

Now, with NARCL forgoing its right to compete, it clears the path for Phoenix to take control.

"For banks, the idea is to maximise value, which is what has happened in this case, and is possibly the best outcome," said a second person familiar with the negotiations.

Mittal Corp is the second case closed after real estate company Jaypee Infratech last week. Unlike Mittal Corp, Jaypee Infratech did not receive any counter bids in the Swiss challenge round.

To be sure, lenders were confident of better interest for Mittal because of an ongoing bidding war for the company under an NCLT-monitored bankruptcy process.

Steel makers Rimjhim Ispat, Shyam SEL & Power and Jindal Stainless were in the fray to take over the company, ET reported last month.

In a revised offer made in August, Shyam SEL offered ₹284 crore. However, the matter is pending in courts as Jindal Stainless and Rimjhim Ispat appealed against the NCLT's order to allow fresh bids at the appellate tribunal.