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  Business   In Other News  27 Oct 2018  Mittal claims win in Essar Steel bid

Mittal claims win in Essar Steel bid

PTI
Published : Oct 27, 2018, 12:51 am IST
Updated : Oct 27, 2018, 12:51 am IST

Consider promoters’ attempt: Firm

Essar Steel promoters, however, wanted the CoC to consider their offer as it offered maximum value to all stakeholders and cannot be ignored citing some process lacunae.
 Essar Steel promoters, however, wanted the CoC to consider their offer as it offered maximum value to all stakeholders and cannot be ignored citing some process lacunae.

New Delhi: NRI billionaire Lakshmi Mittal-led ArcelorMittal on Friday said it has won a bid to acquire debt-laden Essar Steel for over `42,000 crore, a deal that will help fulfil the world’s largest steel maker’s long-time ambition of having an India mill.

A committee of Essar Steel creditors picked ArcelorMittal on October 25, a day when the Ruia family offered to pay lenders `54,389 crore including `47,507 crore in upfront cash to clear all their dues in a last-ditch effort to avert losing their flagship firm.

In a statement, ArcelorMittal said its resolution plan for Essar Steel, which the lenders auctioned to recover over `49,000 crore of unpaid loans, includes “an upfront payment of over `42,000 crore” to settle debt and “a further `8,000 crore of capital injection into the company to support operational improvement, increase production levels and deliver enhanced levels of profitability”.

Subsequent to being declared the highest bidder on October 19, the Committee of Creditors (CoC) has issued ArcelorMittal a Letter of Intent (LoI) declaring them as “successful applicant”.

Essar Steel promoters, however, wanted the CoC to consider their offer as it offered maximum value to all stakeholders and cannot be ignored citing some process lacunae.  

A company spokesperson said the offer is superior to ArcelorMittal’s bid as it provides 100 per cent repayment to lenders and meets the objectives of maximisation of value and protection of the interest of all stakeholders.

It cannot be ignored just because the offer to pull out the company out of bankruptcy was not made before CoC called bids.

He said Section 12A of the Insolvency and Bankruptcy Code (IBC) that allows withdrawal of insolvency proceedings subject to approval by 90 per cent of the creditors and the National Company Law Tribunal (NCLT), was introduced in June 2018, much after the EoI in case of Essar Steel was floated on October 20, 2017. It wasn’t immediately clear if lenders even considered offer of Essar Steel promoters.

In a separate statement, Nippon Steel & Sumitomo Metal Corporation said it had been “engaged in, together with ArcelorMittal, acquisition procedures aiming at jointly acquiring and managing Essar Steel”. “On October 25, ArcelorMittal India, a subsidiary of ArcelorMittal and the resolution applicant, has been declared the successful applicant by Essar Steel’s CoC. The acquisition will be implemented subject to the approvals of Indian NCLT and other relevant authorities,” it said.

Tags: lakshmi mittal, essar steel