The National Company Law Tribunal (NCLT) has approved ArcelorMittal's Rs 42,000-crore takeover bid for Essar Steel. This concludes the insolvency proceedings against Essar Steel 583 days after they were started, instead of the mandated 270 days. Essar Steel has been under the bankruptcy proceedings since June 2017 and owes over Rs 49,000 crore to a SBI-led consortium of over two dozen banks.
The appellate authority, National Company Law Appellate Tribunal (NCLAT), had directed the Ahmedabad bench of NCLT on February 28 to take a call on ArcelorMittal's bid by March 8.
Earlier, on January 29, NCLT Ahmedabad had rejected the debt settlement proposal put forth by the shareholders of Essar Steel saying the offer violates Section 12A of the Insolvency and Bankruptcy Code.
The NCLT had said that Rs 54,389-crore offer by Essar Steel Asia Holding, which was much higher than the ArcelorMittal's Rs 42,000-crore bid, is not admissible as the only way to make a proposal is through Section 12A. Essar Steel Asia Holding is owned by the Ruias.
Accepting ArcelorMittal's rsolution for debt-ridden Essar Steel, NCLT said it cannot impose judicial view over banks' wisdom. The bankruptcy tribunal, however, suggested the steel makers' Committee of Creditors (CoC) to reconsider distribution of dues in order to give 15 per cent of total offer to operational creditors.
On Thursday, a forum of operational creditors with over Rs 1 crore in admitted dues from Essar Steel has appealed to ArcelorMittal to pay their dues as well. In its appeal, a forum of operational creditors with over Rs 1 crore of dues, said it is unfair that ArcelorMittal is not paying a penny to such creditors.
The forum had asked ArcelorMittal to pay them back in instalments over 12 months, if not in one go. Essar Steel's operational creditors with large dues include the national oil marketer IndianOil with over Rs 3,500 crore of dues.
Essar Steel owns a 10-million-tonne steel mill in Gujarat. Last October, Essar Steel's CoC had picked ArcelorMittal to acquire the steel mill for over Rs 42,000 crore. But the original promoters, the Ruias made a counter bid with Rs 54,384 crore offer later and was rejected by the lenders and the resolution professional.
ArcelorMittal's resolution proposal also includes an additional Rs 8,000-crore of capital injection into the company to improve operational efficiencies, increase production and deliver enhanced levels of profitability.