ArcelorMittal agrees to shell out Rs 7,469 cr to bid for Essar Steel

Terming Essar Steel as ‘unique and compelling opportunity’ to gain foothold in India, steel giant ArcelorMittal said it will pay Rs 7,469 crore to the creditors of Uttam Galva and KKS Petron to be eligible to acquire the debtladen firm, as per Supreme Court order.

The Supreme Court on October 4 had granted one more opportunity to the world's largest steelmaker ArcelorMittal and Russia's VTB Capital-backed NuMetal to bid for Essar Steel if they clear their non-performing asset (NPA) dues of their related corporate debtors within two weeks.

"ArcelorMittal announces that in-line with the Indian Supreme Court ruling dated 4 October 2018, it has approved a payment of 7,469 crore rupees (approx USD 1 billion) to the financial creditors of Uttam Galva and KSS Petron to clear overdue debts in order that the offer it submitted for Essar Steel India Limited (ESIL) on 2 April 2018 is eligible and can be considered by ESIL's Committee of Creditors (CoC)," the Luxembourg-headquartered company said in a statement.

The Laxmi N Mittalowned company, which is the world's largest steel maker, which has been on a murky legal battle with other bidders, especially the Russian VTB Bank-promoted NuMetal, had on April 2 submitted a proposal to take over Essar Steel.

Of the Rs 7,469 crore payment, around 80 per cent will be used to settle the dues of Uttam Galva and the rest 20 per cent for KSS Petron, the company said. ArcelorMittal said its board of directors believes that "ESIL represents a unique and compelling opportunity for the Company to establish a significant footprint", with substantial expansion potential, in the high-growth Indian steel market.

"As stipulated in the Supreme Court ruling, ESIL's CoC now has an eight-week period to accept what it considers to be the best resolution plan from eligible applicants," the statement said. Russia's VTB Bank on October 12 had moved the Supreme Court seeking clarification of its October 4 verdict by which mining major ArcelorMittal and NuMetal were granted another opportunity to bid for Essar Steel.

VTB Bank has recently indicated that it was likely to bid alone for the debt-ridden Essar Steel. A bench of justices R F Nariman and Indu Malhotra had said that ArcelorMittal and VTB Bank-promoted NuMetal can bid for Essar Steel, provided the two pay off the non-performing assets (NPAs) of their related corporate debtors within two weeks from October 4. It, however, had held that ArcelorMittal India Pvt Ltd and NuMetal Ltd were ineligible to file resolution plans for corporate debtor Essar Steel—which had NPAs or bad debts amounting to Rs 45,000 crore—as per the criteria laid down in the amended Insolvency and Bankruptcy Code (IBC).