SC to hear ArcelorMittal plea against NCLAT order today
The Supreme Court will hear today an ArcelorMittal plea challenging the NCLAT order that asked it to pay by Tuesday Rs 7,000 crore to become eligible to bid for Essar Steel.
A bench of Chief Justice Dipak Misra and Justices A M Khanwilkar and D Y Chandrachud said, "We will hear the matter tomorrow (Wednesday)".
The matter came up before the apex court on Tuesday, a day after steel tycoon L N Mittal-promoted group made a bid of Rs 42,000 crore for Essar Steel.
ArcelorMittal has moved the apex court challenging the NCLAT order of September 7 by which it had held as eligible the second bid of NuMetal, a consortium of Russia's VTB-JSW, for Essar Steel. The National Company Law Appellate Tribunal (NCLAT) had asked ArcelorMittal to clear the stigma of defaulter by clearing the dues of its subsidiaries. The NCLAT had last Friday ruled that NuMetal's second bid for Essar Steel is eligible but the same by ArcelorMittal will qualify only if it clears the Rs 7,000 crore dues of firms it was previously associated within three days. Investors reacted negatively to ArcelorMittal’s revised bid for Essar Steel, reasoning that it is overpaying for the Indian company. ArcelorMittal shares fell more than 2 per cent in London on Tuesday.
One London-based analyst said the price in dollars per tonne of capacity was about twice that proposed in ArcelorMittal's bid for similarly sized Italian steelmaker Ilva. ArcelorMittal has agreed to pay 1.8 billion euros for Ilva and will invest an additional 2.3 billion euros on productivity and pollution controls compared to the $5.78 billion plus $1 billion (Rs 7,000 crore) it has offered for Essar .
ArcelorMittal’s had fist made a bid for Essar Steel in February, when NuMetal also bid, but the committee of creditors (CoC) had disqualified both the bids saying their promoters were tied to companies which were bank loan defaulters and hence ineligible under Section 29A of the Insolvency and Bankruptcy Code (IBC). The second round of bids was called, where JSW Steel joined NuMetal to put in a bid of Rs 37,000 crore, while Vedanta entered the fray as a third bidder. ArcelorMittal too had put in a bid. The NCLAT held that the first round of bids were not eligible but NuMetal's second bid submitted on March 29, after restructuring the share holding, was eligible. It had asked ArcelorMittal to clear the dues of Uttam Galva Steel and KSS Petron by September 11 for its bid to be considered eligible. The tribunal ordered the committee of Essar Steel creditors to get the highest value, including by negotiating with the eligible bidders, expeditiously.
Both NuMetal and Essar Steel had initially moved the National Company Law Tribunal (NCLT)-Ahmedabad challenging the disqualification of the first round of bids. The NCLT had refused to give any relief to the bidders but asked the CoC to take another look at the bids before disqualifying them.