Uttam Galva Steels said on Monday it proposed to repay State Bank of India (SBI) if the lender agreed not to seek a resolution for the bankrupt firm in the National Company Law Tribunal (NCLT). The company owed lenders around Rs 5,637 crore as of March 2017. Uttam Galva sought four to five weeks from the Mumbai bench of the NCLT, indicating it planned to rope in a foreign investor to help repay its debts. Last week State Bank of India (SBI) rejected a one-time settlement put forward by the steel producer that would have resulted in a large haircut of around 50% for the bank.
FE had reported in March that ArcelorMittal, which held a 29.05% stake in Uttam Galva, is likely to infuse around Rs 3,000 crore into the debt-strapped company to help it settle its dues with its lenders. ArcelorMittal, which has rebid for steelmaker Essar Steel, one of the coveted assets in the insolvency proceedings, had seen its bid rejected in the first round on its failing to meet the “eligibility” criteria. An amendment to the Insolvency and Bankruptcy Code (IBC) had ensured that promoters of defaulting companies were disqualified from bidding for other stressed assets.
As ArcelorMittal had been classified as a promoter of Uttam Galva Steels till earlier this year (the global steel major sold its 29.05% stake in the company on February 7), it continues to face the prospect of its bid being stalled due to regulatory hurdles related to Article 29 A of the Insolvency and Bankruptcy Code (Amendment) Bill, 2017. The company has challenged the resolution professional classifying its bid as “not eligible” in the first round of bids in NCLT, Ahmedabad. The latest move by Uttam Galva to repay its entire debt and emerge a non-defaulter could also work in favour of ArcelorMittal’s renewed bid for Essar Steel.
Uttam Galva was referred to the NCLT by SBI on March 15. During FY18, it posted a net loss of Rs 881 crore on revenues of Rs 3,418 crore. Apart from SBI, some of the other lenders to Uttam Galva include Canara Bank, Bank of India, Bank of Baroda and Union Bank.