ArcelorMittal wins bid to take over Essar Steel
New Delhi, October 26
NRI billionaire Lakshmi Mittal-led ArcelorMittal on Friday said it has won a bid to acquire debt-laden Essar Steel for over Rs42,000 crore, a deal that will help fulfil the world’s largest steelmaker’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 Rs 54,389 crore, including Rs 47,507 crore in upfront cash, to clear all their dues in a last-ditch effort to avert losing their flagship company.
In a statement, ArcelorMittal said its resolution plan for Essar Steel, which the lenders auctioned to recover over Rs 49,000 crore of unpaid loans, includes “an upfront payment of over Rs42,000 crore” to settle debt and “a further Rs 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 has issued ArcelorMittal a Letter of Intent declaring them as “successful applicant”.
Essar Steel promoters, however, wanted the CoC to consider their offer as it offered the 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 the CoC called bids.
He said Section 12A of the Insolvency and Bankruptcy Code that allows withdrawal of insolvency proceedings subject to approval by 90 per cent of the creditors and the National Company Law Tribunal, 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 the offer of Essar Steel promoters. — PTI
