Essar Steel bid: ArcelorMittal targets Vedanta
which is locked in a three-way fight for the acquisition of Essar Steel, first wrote a letter targeting rival bidder Vedanta over its alleged violation of environmental law and human rights but shortly thereafter withdrew the letter.
ArcelorMittal, which is competing against Russia’s VTB Group-backed Numetal Ltd and Vedanta for the takeover of Essar Steel, on September 15 wrote a hard-hitting letter on “facts” in relation to alleged “environmental law violations committed in India and Zambia, illegal mining, disregard for safety standards and human rights violations” by Vedanta.
The letter was addressed to the Resolution Professional, which is conducting the auction of Essar Steel to recover over ₹49,000 crore of unpaid loans of banks. But ArcelorMittal later withdrew the letter saying, “an internal draft of such letter was inadvertently shared”.
“Please ignore the communication for now. We regret any inconvenience caused to you”. The letter went on to state that the company reserves all rights in relation to the issue. A company spokesperson had declined to comment when reached out for a response on the September 15 letter. Later a withdrawal letter, bearing September 16 as the date, came to light. A Vedanta spokesperson had strongly reacted to the September 15 letter saying it was “highly disappointed that such baseless and irrelevant issues are being raised and unfounded allegations are being made with the objective to malign competitors”.
“Similar attempts were made at the time of our bid for Electrosteel Steels Ltd as well and the same were dealt with by NCLT and NCLAT appropriately by dismissing the challenges of competing resolution applicants. NCLAT in its order dated August 10, 2018, declared Vedanta Limited as an eligible applicant under Section 29A of the IBC,” the spokesperson said.
Vedanta had won the bid to acquire Electrosteel with an offer of ₹5,320 crore. In the sixpage letter of September 15, ArcelorMittal had written to the Resolution Professional saying the cornerstone of the Insolvency and Bankruptcy Code (IBC), under which Essar Steel is being auctioned to recover unpaid loans, is full and complete disclosure of all material facts and so it is inviting attention to certain facts in respect of Vedanta.
The National Company Law Appellate Tribunal (NCLAT) had on September 7 held Numetal’s ₹37,000 crore secondround bid for Essar Steel was valid, but rival bidder ArcelorMittal would have to clear ₹7,000 crore overdue loans of its previously associated firms to qualify for the acquisition.
ArcelorMittal subsequently revised its bid to ₹42,000 crore and challenged the NCLAT order before the Supreme Court asking it to clear the dues of Uttam Galva and KSS Petron. The court is likely to further hear the appeal on Tuesday.
NEWDELHI:ArcelorMittal,