Last week, FE had reported that Essar Steel will soon see a second round of bidding as both the resolution bids submitted by ArcelorMittal and the VTB Bank-led Numetal have been disqualified by Essar Steel’s committee of creditors (CoC).
Days after Russia’s Numetal approached the Ahmedabad bench of the National Company Law Tribunal (NCLT) seeking a declaration that it is eligible to submit a resolution plan for Essar Steel, the LN Mittal-led ArcelorMittal has also knocked on the doors of the tribunal, challenging its deemed ineligibility in bidding for the beleaguered company. In a statement issued on Monday, ArcelorMittal said that the company has received a formal notification on March 23 that its bid was “deemed ineligible” due to the technicality of still being a promoter of Uttam Galva on the stock exchange, even though the company had sold its
shareholding before submitting its offer, and that the stock exchanges have confirmed that ArcelorMittal was declassified as a promoter of Uttam Galva.
“We have therefore today proposed a legal challenge to the decision of the resolution professional in the court in Ahmedabad. This is also critical in order to ensure we protect our rights in the process given the legal challenge by Numetal against the decision,” the statement said. The company statement added, “ArcelorMittal always firmly believed and continues to believe that our strong and competitive bid for Essar Steel India, submitted on February 12, was fully eligible and therefore should have been placed before the Committee of Creditors by the Resolution Professional.” On March 21, Numetal had issued a press statement stating, “Numetal apprehends that full facts submitted by Numetal for determination of its eligibility to submit a Resolution Plan have not been appropriately assessed. Accordingly, in the Application, all necessary facts for determining the eligibility of Numetal have been placed before the Hon’ble NCLT for an objective assessment.” The decision is pending on the matter and the next hearing is slated for Tuesday.
Last week, FE had reported that Essar Steel will soon see a second round of bidding as both the resolution bids submitted by ArcelorMittal and the VTB Bank-led Numetal have been disqualified by Essar Steel’s committee of creditors (CoC). According to bankers, only the resolution applicants who had initially submitted expressions of interest (EOIs) for Essar Steel would be eligible to bid in the second round. Meanwhile, speaking to reporters on the sidelines of a press conference on Monday, Sajjan Jindal, chairman, JSW Group, reiterated his stand that promoters who have defaulted should not be allowed to participate in the Insolvency and Bankruptcy Code process. “If you say that the defaulting promoter is not allowed and that defaulting promoter cures himself by selling the shares then that is a mockery of the system, of the law. Spirit of law is very important,” he said without taking any specific names.
Jindal also said that though JSW Steel was willing to put in a competitive bid for Essar Steel in the second round of bidding, its proposal was turned down by the CoC on the grounds that it did not participate in the expression of interest stage the first time. “We did not participate in the EOI the first time because at that time we were busy with Bhushan Steel and the other companies. We cannot acquire all the steel assets and identified Bhushan Steel as the prime asset but Tata outbid us, which is fair. So, in this case (Essar Steel), we wanted to re-enter and wanted to give good competition, and the creditors would get more money if we were involved,” he said.
“We gave it in writing to the CoC that we don’t need any time and we are willing to participate on an as is basis and (with) whatever information we have, but in their own discretion and in their thought process they did not want to give a new entrant a chance and they did not allow us, which is okay for us. If they don’t want more money it is up to them. It is public money after all, and we were willing to participate and give a good fight,” he said. He also denied that the company has any plans of aligning with an existing bidder for Essar Steel.