Lakshmi Mittal, whose recent bid for debt-laden Essar Steel was rejected, has not given up on his hopes of owning a prized metals production asset in India.
Lakshmi Mittal, whose recent bid for debt-laden Essar Steel was rejected, has not given up on his hopes of owning a prized metals production asset in India. His ArcelorMittal, which was disqualified from bidding for ownership of Essar Steel under the newly-implemented IBC law, is planning to re-bid to acquire the erstwhile Ruia family-controlled firm, the company said through its PR agency.
The only two bids submitted by both ArcelorMittal and Numetal Mauritius was rejected as they were found ineligible under Section 29A of the Insolvency and Bankruptcy Code (IBC) as they were related parties in loan defaults. However, the Committee of Creditors (CoC) has said that if these two companies fully comply with the IBC and delink their connections with loan defaults, they can be allowed for the re-bid. The CoC is holding a fresh bidding process for Essar Steel, the deadline for which is April 2.
“But we can confirm it is our intention to participate in a re-bid,” ArcelorMittal’s PR agency said to FE Online in an e-mail, adding that the firm has not yet received any formal notification from the resolution professional. On Wednesday, after days of suspense, the CoC decided that bids submitted by both ArcelorMittal and Numetal Mauritius were ineligible under amended IBC, which bars wilful defaulters, defaulting promoters, and related persons from the bidding process.
Both ArcelorMittal and Numetal Mauritius showed a keen interest in acquiring beleaguered-steel giant which is under insolvency resolution process for a loan default of Rs 45,000 crore under IBC. ArcelorMittal’s bid was rejected as both ArcelorMittal and its Chairman La held stakes in companies that defaulted on loans. ArcelorMittal held 29% stakes in Uttam Galva Steel, which is also under resolution process, while Lakshmi Mittal held stakes in KSS Petron Private Limited which was declared an NPA in 2015.
While stakes in both companies were sold before Essar Steel’s bidding, the lenders rejected the bid saying that ArcelorMittal was a promoter of Uttam Galva and continued to remain a promoter for more than a year. Currently, ArcelorMittal can pin hopes on three options that may help them pass the eligibility test this time: If it helps Uttam Galva settle its dues with lenders by remitting Rs 3,000 crore; if BSE decides to change ArcelorMittal’s status as a promoter; or if lenders accept Uttam Galava’s one-time settlement offer to lenders.
Lakhsmi Mittal is of the view that Essar provides a compelling opportunity for ArcelorMittal to enter the high growth Indian steel market. Last month, he also met Finance Minister Arun Jaitley to make a strong case for ArcelorMittal as the best fit for Essar.