Mittal offer before tribunal
Calcutta: The committee of creditors (CoC) for Essar Steel India may seek direction from the appellate company law tribunal to deal with the conditional offer made by ArcelorMittal to pay Rs 7,000 crore on account of an overdue loan amount for two non-performing assets, Uttam Galva Steels Ltd (UGSL) and KSS Petron.
The National Company Law Appellate Tribunal will hear the matters relating to the Essar bankruptcy process on Thursday where the lender's committee will make the submission on the offer ArcelorMittal made on Tuesday, transferring the money to an SBI account with a request to escrow on the deposited fund.
It is understood that the offer from the world's largest steel maker comes with the rider that it should be declared an eligible and successful resolution applicant for Essar.
ArcelorMittal's offer is at variance with the demand made by the CoC on May 8 when it gave seven-days time to pay up the overdue loan for UGSL and KSS.
The letter follows an order from the Ahmedabad bench of the NCLT which directed the lenders to give 30 days time to Essar's two resolution applicants, ArcelorMittal and Numetal, to cure their ineligibility by paying up the overdues.
"It appears that the lenders are wary to take a decision on ArcelorMittal's conditional offer which provides a remedy but not cure. They will ask the NCLAT to adjudicate on the matter," a source said.
Numetal, which has been asked to clear the overdue amount for Essar Steel itself, has challenged the demand of the lenders and replied it could not be held ineligible because of the presence of Rewant Ruia, son of Ravi Ruia, the promoter and founder of Essar Group, in the resolution applicant as he is neither a director nor in the management. Moreover, it had proposed that the other shareholders of the company, led by VTB of Russia, will buy out Ruia's share if required.
Lenders will communicate the response of Numetal to the appellate tribunal as well.
Numetal has knocked on the door of the NCLAT on two matters. First, it opposed the cure offered by the lower tribunal to ArcelorMittal by paying up the overdue amount. Second, the company has asked that it should be declared an eligible resolution applicant. ArcelorMittal has maintained that it could not be held ineligible because of UGSL or KSS Petron and any payment on those accounts would be only a "goodwill gesture".
Uttam Galva googly
In a communication to the stock exchanges, UGSL said it was unaware of ArcelorMittal's Rs 7,000-crore offer. "We would like to inform you that the company has not received any communication either from the lenders or ArcelorMittal," the notice read, indicating a difference of opinion between existing promoter Miglani family and ArcelorMittal.
ArcelorMittal held shade over 29 per cent stake in UGSL before selling them prior to submitting bid for Essar. It also had divested entire holding in KSS Petron before the bid. ArcelorMittal's offer will raise vexed issue on how the money will be treated by UGSL, KSS Petron and the lenders, as the former are no longer promoters of either of the companies.
It also pointed out that the company was a passive investor in both with no management or governance role.