The sale of bankrupt SREI’s assets has hit a hurdle with forensic auditors detecting a Rs 13,100 crore hole in its books. In another twist, Payash Capital Singapore, a 49 per cent stakeholder in Trinity Alternative Investment Managers Limited (TAIML), has challenged the decision to include LN Mittal-owned Arcelor Mittal in the race to acquire SREI assets.

TAIML is an investment manager managing AIF funds that is jointly promoted by SREI Infrastructure Finance Limited (SIFL) with a 51 per cent stake, while the balance 49 per cent is held by Payash Capital Singapore PTE Limited.

TAIML has filed claims worth Rs 10,000 crore from Arcelor Mittal entities and Payash has challenged their inclusion in the SREI bid process, saying it will ‘hinder’ TAIML recovery.

Payash Capital, in a letter to the SREI administrator, has objected to the inclusion of Arcelor Mittal in bidding for SREI assets as it would “hinder and disrupt the ongoing recovery proceedings by TAIML against Arcelor Mittal.”

WAR OVER SLURRY

TAIML and Arcelor Mittal have been engaged in a legal battle over payments of dues in the Odisha Slurry pipeline. Arcelor Mittal had acquired a 100 percent stake on Odisha Slurry through its acquisition of Essar Steel in 2019 through IBC, wherein 70 per cent was initially held by IGOF-SMAIT – managed by TAIML.

TAIML has contended that Arcelor Mittal, though emerging as a successful bidder for Odisha Slurry in 2020 with a proposal to infuse capital of Rs 2,400 crore in the company and pay for usage, continued to use the pipeline but neither infused capital nor paid for usage, resulting in a huge loss to lenders.

TAIML has instituted several legal proceedings against the Arcelor Mittal entity (Arcelor Mittal Nippon Steel India Limited) on account of TAIML’s huge monetary claim to the tune of about Rs10,000 crore.

Payash Capital has expressed concerns that if Arcelor Mittal entity bids are accepted and SREI data rooms are made available to them, it will compromise numerous confidential documents pertaining to the TAIML litigation with the Arcelor Mittal entity and create a situation wherein they may be pressurised into withdrawing all litigations. “TAIML has a fiduciary duty towards its investors protect and maximize their investments,” it says.

Payash contends that Arcelor Mittal is ineligible to bid for SREI. As per the provisions of IBC, Section 29A (c), a person who at the time of submission of the resolution plan has an account of Corporate Debtor, shall not be eligible to submit a Resolution Plan. Also Payash contends that Arcelor Mittal has no NBFC experience

FIVE BIDDERS

Notably, till date the administrator has received interest from five bidders to acquire SREI assets – the Shon Randhawa and Rajesh Shah combine; a consortium of Varde partners and Arena investors; Capri Global, Arcelor Mittal-promoted AM Mining India and Edelweiss ARC.

The last date for completion of the resolution process was recently extended to January 5, and that of submitting final bids with a resolution plan to November 25.

The RBI superseded the boards of two SREI companies in October last year and began the insolvency process by appointing an administrator.

It is estimated that SREI has total liabilities of around Rs 18,000 crore in bank loans and another nearly Rs 10,000 crore of external commercial borrowings and bonds.