Secured lenders are expected to get Rs 420bn on total debt of Rs 490 bn, with a recovery of around 86 per cent for the steel company (Photo: JULIEN WARNAND/AFP/Getty Images).
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Steel giant, ArcelorMittal in a bid to acquire debt-ridden Indian steel producer, Essar Steel has agreed to pay a sum of Rs 500 billion (£6.83bn), including Rs 80bn as capital infusion after the lenders have begun voting on its offer.

The electronic voting process started on Tuesday (23) and the banks have 24 hour time to either accept or reject the offer made by the steel giant.

According to the offer made by the Luxembourg-based steel firm, the secured creditors are about to obtain Rs 394bn and also Rs 25bn fund into the company which bring the sum offered by ArcelorMittal to Rs 420bn.

In addition to this, the LN Mittal owned firm has said that it is ready to infuse Rs 80bn as an investment later, said Indian business daily, The Economic Times in a report.

According to an agreement made during the wee hours of Tuesday, the lenders, advocates, and officers from ArcelorMittal gave an outline to the deal to hand over the control of Essar Steel to the steel giant.

Accordingly, the deal includes payments to unsecured creditors and 100 per cent repayment to small operational creditors with dues of up to Rs 10 million. The staff and other employees are expected to get Rs 180m and which will also be paid in full.

Secured lenders are expected to get Rs 420bn on total debt of Rs 490bn, with a recovery of around 86 per cent for the steel company. This is one of the biggest among 12 dragged to insolvency court by India’s central bank, Reserve Bank of India’s (RBI’s) first list of defaulters.

State Bank of India (SBI) and Edelweiss ARC are placed on the top of the list of the debt holders in Essar Steel, with the loan amount of Rs 136.52bn and Rs 54.73bn, respectively. The two cover up about 35 per cent of the vote.