A day after the Committee of Creditors voted in favour of its bid, ArcelorMittal on Friday said its long-term aspiration for Essar Steel is to increase its finished steel shipments to between 12 and 15 million tonnes through the addition of new iron and steel making assets. Essar Steel’s current level of annualised crude steel production is at 6.5 million tonnes.
“The Company’s intention to increase ESIL’s finished steel shipments to 8.5 million tonnes over the medium-term. This will be achieved by initially completing ongoing capital expenditure projects and infusing expertise and best practice to deliver efficiency gains, and then through the commissioning of additional assets, while simultaneously improving product quality and grades to realise better margins,” ArcelorMittal said.
Essar Steel India Limited’s (ESIL) Committee of Creditors (CoC) has voted to approve ArcelorMittal’s acquisition of ESIL. ESIL’s Resolution Professional, on behalf of the CoC, has issued the Company with a Letter of Intent (LOI) stating that the company has been identified as the ‘Successful Applicant’.
The Resolution Plan includes an upfront payment of Rs 42,000 crore towards ESIL’s resolution debt, with a further Rs 8,000 crore of capital injection into ESIL to support operational improvement, increase production levels and deliver enhanced levels of profitability.
ESIL also has iron ore pellet facilities in the east of India, with current annual capacity of 14 million tonnes per annum.
ArcelorMittal said that in-line with ESIL’s corporate insolvency process, the resolution plan must now be formally accepted by National Company Law Tribunal (NCLT). It said that the acquisition would be completed by the end of 2018.
After completion, ArcelorMittal will jointly own and operate ESIL in partnership with Nippon Steel & Sumitomo Metal Corporation, Japan’s largest steel producer and the third largest steel producer in the world.
ArcelorMittal and NSSMC expect to finance the joint venture through a combination of partnership equity (one-third) and debt (two-thirds), and ArcelorMittal anticipates that its investment in the joint venture will be equity accounted.
via Essar Steel buy: ArcelorMittal, Ruias gear up for legal battle – The Hindu BusinessLine
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