Uttam Galva asked to give bank guarantees
MUMBAI: Lenders to Uttam Galva Steels Ltd have asked the company to furnish bank guarantees amounting to at least 25% of its outstanding loans, said two people directly aware of the development.
The consortium of lenders led by State Bank of India (SBI) has also asked the company to sign a binding agreement with respect to its repayment offer, which would lay down the repayment schedule in a time-bound manner, the people cited above said on the condition of anonymity.
The development assumes importance because the eligibility of Arcelormittal to bid for bankrupt steel maker Essar Steel Ltd depends on whether Uttam Galva, in which Arcelormittal was earlier classified as a promoter, repays all overdue loans to the lenders.
reported on May 2 that lenders to Essar Steel had said Arcelormittal was liable to repay dues to lenders.
“This has a direct bearing on Arcelormittal’s eligibility as a bidder for Essar Steel,” said one of the two people cited above.
Spokespersons for ArcelorMittal and Uttam Galva declined to comment.
Uttam Galva, according to the second person cited above, has not responded to the lenders’ offer.
had reported on April 16 that Uttam Galva offered to repay its creditors in full after its previous offer to pay back 51% of its dues was rejected last week.
The steelmaker has sought time to arrange funds. On April 12, lead lender SBI had rejected the Uttam Galva offer because under the initial proposal, the bank would have had to wait until 2042 for the last instalment.