Essar Steel lenders set to name Arcelormittal top bidder for takeover
MUMBAI: Lenders to Essar Steel Ltd plan to name Arcelormittal Netherlands NV the top bidder for the beleaguered steel maker after it agreed to clear debts owed by Uttam Galva Steels Ltd and KSS Petron Pvt. Ltd where it once held stakes, two people aware of the development said.
On Tuesday, a banker involved directly in the resolution proceedings told that Arcelormittal will be transferring ₹7,000 crore into an escrow account with the State Bank of India, the largest lender to Essar Steel to settle the debt. This will go to settle all of the debt owed by Uttam Galva and KSS.
“The money has already come into the escrow account. Most lenders are in favour of ArcelorMittal as they have agreed to pay up all the outstanding dues for Uttam Galva and KSS,” one of the two people cited earlier said on condition of anonymity.
Essar Steel’s committee of creditors (COC) plan to submit their choice of Arcelormittal to the National Company Law Appellate Tribunal on May 17, a banker involved in the proceedings, second person aware of the matter said.
On May 10, Essar Steel’s other suitor Numetal Mauritius had moved the appellate tribunal seeking a second round of bidding, the person said. ArcelorMittal had submitted a higher bid than Numetal in the first round. The next hearing of the matter is slated for May 17, when the lenders also plan to submit their decision.
The banker mentioned said Arcelormittal is paying lenders more than the amount due from Uttam Galva and KSS.
“The total amount due on these accounts is around ₹6,300 crore. Arcelormittal has agreed to pay ₹7,000 crore to the lenders,” he said.
On May 8, the
had reported that the firm was willing to pay up around ₹8,500 crore to settle the debt of Uttam Galva and KSS Petron. Paying the dues would “cure” the European steelmaker’s bid for Essar Steel, a condition that the COC had insisted upon.
The lenders had asked Arcelormittal to settle the debt for Uttam Galva and KSS Petron to become eligible as a resolution applicant. The firm was earlier classified as a promoter of Uttam Galva which features in the second list of non-performing accounts referred by the Reserve Bank of India for resolution under the Insolvency and Bankruptcy Code. It also owned 32% stake in Kazstroyservice in Kazakhstan which owned KSS Petron. KSS Petron was classified as an NPA in 2015.
A spokesperson for ArcelorMittal said the company has replied to a letter it received from the COC on May 8.