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Essar Steel creditors' panel approves ArcelorMittal's acquisition bid

The Committee of Creditors of Essar Steel accepted the joint offer made by ArcelorMittal and Japan's Nippon Steel.

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Essar Steel creditors' panel approves ArcelorMittal's acquisition bid
Photo: Reuters

A day after Ruia family, the original Essar Steel promoters, made had a last ditch effort to save their crown jewel by offering to pay up Rs 54,389 crore to all creditors of the company, the Committee of Creditors accepted the joint offer made by ArcelorMittal and Japan's Nippon Steel.

In a statement, ArcelorMittal said its resolution plan for Essar Steel, which the lenders auctioned to recover over Rs 49,000 crore of unpaid loans, includes "an upfront payment of Rs 42,000 crore" to settle debt and "a further Rs 8,000 crore of capital injection into the company to support operational improvement, increase production levels and deliver enhanced levels of profitability".

The Lakshmi Mittal-owned global steel giant bagged the lenders' approval following a long legal battle with other players in the race for acquiring Essar Steel.

ArcelorMittal, world's largest steel maker, had earlier agreed to pay Rs 7,469 crore to the creditors of Uttam Galva and KKS Petron to be eligible to acquire Essar Steel in line with the Supreme Court order.

The Committee of Creditors have issued ArcelorMittal and its partner Japan's Nippon Steel & Sumitomo Metal Corp a Letter of Intent (LoI) declaring them as the "successful applicant".

The development comes a day after promoters of Essar Steel offered to pay lenders Rs 54,389 crore, including Rs 47,507 crore upfront cash payment to clear all dues of lenders, and pull out the firm from insolvency proceedings.

On Thursday, Ruia family, the original promoters made had a last ditch effort to save their crown jewel from being snatched away from them by offering to pay up Rs 54,389 crore to all creditors of the company to withdraw it from the ongoing insolvency and bankruptcy procedure.

Essar Steel is believed to be making operational profit at a run rate of Rs 6,000 crore per annum on annual revenue of an estimated Rs 24,000 crore.

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