Essar headquarters
Employees walk past an Essar Group logo outside the company headquarters in Mumbai in this 2013 file photo. REUTERS/Vivek Prakash/File Photo

The Edelweiss Group, a part of the lenders consortium to Essar Steel Ltd., is willing to provide nearly Rs 800 crore by way of interim financing to help the steelmaker stay afloat during insolvency proceedings, according to a BloombergQuint report on Thursday.

The report said that Edelweiss intends to fund Essar Steel for six months at an interest rate of 15-20 percent, out of its stressed assets funding business.

Interim financing is essential to keep Essar Steel as a going concern till lenders and the IRP finalise a restructuring plan within the stipulated 270 days, the report said.

It said that Edelweiss has discussed the proposal with Satish Kumar Gupta, the interim resolution professional in the Essar Steel insolvency case. It's now awaiting approval from the committee of creditors, as is the norm under the Insolvency and Bankruptcy Code, two of the three sources told BloombergQuint.

In a meeting held on Wednesday, the insolvency professional apprised lenders of the Edelweiss offer. Gupta is from turnaround and interim management firm Alvarez & Marsal India, which was appointed by a consortium of lenders led by State Bank of India for the insolvency case.

Essar Steel was among the first list of dozen companies that the Reserve Bank of India had identified for insolvency proceedings. The dozen companies drawn up by banks contribute a quarter of bad loans of Indian lenders. The steelmaker has among the largest insolvency cases with a debt of over Rs 40,000 crore, and has challenged the move in the Gujarat High Court but failed to get relief.

Edelweiss Asset Reconstruction Company Ltd. is a member of the lending consortium to Essar Steel. The ARC had purchased the steel company's loans from HDFC Bank Ltd., Federal Bank Ltd., Axis Bank Ltd. and ICICI Bank Ltd. However, the interim funding proposal has come from a different arm of the Edelweiss Group.