ArcelorMittal, the world’s largest steelmaker, said on Wednesday that it has approved a payment of ₹ 7,469 crore to the financial creditors of Uttam Galva and KSS Petron, in order to comply with the Supreme Court’s (SC’s) order and become eligible to bid for Essar Steel India.
The development comes a day before the SC’s deadline to ArcelorMittal and Numetal—for clearing the overdue debts of companies where their promoters had influence—comes to an end.
“ArcelorMittal’s board of directors believes that Essar Steel represents a unique and compelling opportunity for the company to establish a significant footprint, with substantial expansion potential in the high-growth Indian steel market. It concluded that, given the significant benefits that Essar Steel would bring to ArcelorMittal, making this payment was an appropriate course of action under the circumstances,” the Luxembourg-headquartered company said in a statement.
The statement from ArcelorMittal came a day after media reports claimed that it had offered to clear ₹ 4,554 crore of Uttam Galva and KSS Petron’s debts. The reports quoted a letter sent by ArcelorMittal to the Committee of Creditors (CoC) last week.
On October 4, the SC had given ArcelorMittal and Numetal two weeks to clear the non-performing asset debts of the companies where ArcelorMittal and Numetal’s promoters had a stake and control. ArcelorMittal Netherlands’ 29% stake in Uttam Galva and Lakshmi Mittal’s 33% stake in KSS Petron’s parent KazStroyService, was sold only after the corporate insolvency resolution process for Essar Steel had begun. According to section 29 (A) of the insolvency code, promoters of bankrupt companies will not be eligible to bid for other bankrupt companies. The apex court ruled that merely selling the stake during the resolution process for Essar Steel did not make ArcelorMittal eligible and that it would be required to clear the NPA dues of Uttam Galva and KSS Petron.
Numetal, where Ravi Ruia’s son Rewant Ruia was once a stakeholder, was asked to clear the dues of Essar Steel and other NPAs of the Essar Group before it could become eligible to bid for the 10 million tonne per annum steelmaker. It is not immediately known whether Numetal will decide to clear the dues to become eligible to bid for Essar Steel.
Essar Steel’s integrated steel plant on the coast of Gujarat produces high quality flat steel products used for everything from automobiles to warships. It was the first asset to go under the corporate insolvency resolution process (CIRP) as prescribed by the Insolvency and Bankruptcy Code (IBC), last July and it remains the largest asset available under IBC in India. The attempts by the Essar Group to acquire the company again under IBC led to the government introducing the Section 29 (A) amendment last November.
After October 18, the CoC will have eight weeks to decide the best bid for Essar Steel. The CoC will be considering the bids it received on April 2, 2018 when it was reported that ArcelorMittal had offered ₹ 37,000 crore and Vedanta had offered ₹ 35,000 crore.
