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 debt-laden 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 Lakshmi Mittal-owned 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.
It concluded that, given the significant benefits that ESIL would bring to ArcelorMittal, making this payment was an appropriate course of action under the circumstances.
"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).
As per the verdict, ArcelorMittal will qualify to bid for Essar Steel only if it clears about Rs 7,000 crore dues of two firms, Uttam Galva and KSS Petron, it was previously associated with.
With regard to NuMetal, the court had held that it was a shell company of Essar Group promoter Ravi Ruia and can only become eligible after of the NPAs of the group firms.
The court, however, had not specified NPAs of NuMetal's related corporate debtors which have to be paid off to become eligible to bid for corporate debtors Essar Steel.
Earlier, both the firms had moved the apex court against the decision of National Company Law Appellate Tribunal which had ruled that NuMetal's second bid for Essar Steel was eligible, but the same by ArcelorMittal would qualify only if it cleared the Rs 7,000 crore dues of two firms it was previously associated with.
ArcelorMittal is the world's leading steel and mining company, with a presence in 60 countries and an industrial footprint in 18 countries. When it comes to coal mining, it is the fifth largest globally.
In 2017, ArcelorMittal had revenue of USD 68.7 billion and crude steel production of 93.1 million tonne, while own iron ore production stood at 57.4 million tonne.
ArcelorMittal is listed on the stock exchanges of New York, Amsterdam, Paris, Luxembourg apart from the Spanish stock exchanges of Barcelona, Bilbao, Madrid and Valencia.
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