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In a surprise move, ArcelorMittal has placed an expression of interest (EoI) to acquire Srei Infrastructure Finance (SIFL) and Srei Equipment Finance (SEFL) in an insolvency-driven process.
While the entry of a steel company to bid for struggling NBFCs has surprised many, industry watchers recalled the year-long battle between both the companies. A mail sent by businessline to ArcelorMittal did not elicit any response.
Battle in SC
In August, Srei Infrastructure had moved the Supreme Court against ArcelorMittal acquiring its 253-km slurry pipeline company Odisha Slurry Pipeline Infrastructure (OSPIL) for ₹2,360 crore under the insolvency process after a battle of over three years. OSPIL was set up as a wholly owned subsidiary of Essar and was later hived-off to a clutch of financial lenders, including Srei, for ₹4,000 crore.
Srei Infra has alleged that the resolution plan of ArcelorMittal India was discriminatory in the manner of distribution between the similarly-situated secured and unsecured creditors. Srei further said it, being a secured financial creditor, was being treated differently to other similarly-situated creditors like banks.
Data room access
ArcelorMittal will get to access the data room for Srei Group companies if its EoI is accepted by the resolution professional. This will in turn, help ArcelorMittal firm up strategy in its legal battle in the Supreme Court, sources said.
Last October, the RBI had superseded the boards of SIFL and its wholly-owned subsidiary SEFL and insolvency proceedings were initiated. Financial creditors have raised claims worth ₹10,727 crore against SIFL and ₹31,868 crore against SEFL. Varde Partners and Arena Investors LP have jointly submitted a bid, while another bid is from the investors’ consortium, Shon Randhawa and Rajesh Viren Shah.
The Srei Group, which is currently under the RBI-appointed administrator Rajneesh Sharma, has managed to recover about ₹2,100 crore. The RBI-appointed administrator has admitted claims worth ₹32,749 crore from the company’s creditors. So far, transaction auditor BDO India has classified multiple transactions of about ₹5,000 crore as fraudulent.
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