Finally, global steel giant ArcelorMittal
is set to take over the crippled Essar Steel for Rs 42,000-crore with the Ahmedabad bench of the NCLT giving the go-ahead Friday.
The resolution process has already crossed the 270 days mandated deadline long ago after the Ruias, the original promoters of the 10-million steel mill, has been throwing up one legal challenge after another since June 2017 when the company taken to the bankruptcy court.
This is the largest ever payout by a new company to an NCLT asset since the IBC came into effect in May 2016. The previous one was the Rs 35,000 crore takeover of Bhushan Steel by Tata Steel last year.
But the Ruias again hinted at more protracted battle saying their offer of Rs 54,389 crore was the best for all.
The decision was handed down by the two-member NCLT bench of Harihar Prakash Chaturvedi and Manorama Kumari after the appellate authority NCALT had last month set a deadline to close the matter by today.
In its bid to takeover Essar Steel, ArcelorMittal has proposed an upfront payment of Rs 42,000 crore towards the debt resolution and an additional capital infusion of Rs 8,000 crore into the steel mill.
Essar Steel owns a 10-million-tonne steel mill at Hazira in Gujarat.
Earlier in February, the National Company Law Appellate Tribunal (NCLAT) had directed the NCLT Ahmedabad to take a decision by March 8 on the ArcelorMittal bid.
The decision came after the lenders rejected the higher counter bid by Essar Steel Asia Holdings offering complete upfront payment to all lenders and financial creditors with a Rs 54,389 crore offer. The company originally owed Rs 49,000 crore to the lenders.
“We continue to believe that our settlement proposal of Rs 54,389 crore is the most compelling one available to Essar Steel creditors and fulfills the IBC’s declared overriding objective of value maximisation.
“We are awaiting the order, and will take a call on the next steps after examining the same,” Essar group said in a statement after the order.
ArcelorMital, welcoming the decision said, “we hope to complete the transactions as soon as possible.”
On January 29, NCLT had rejected the debt settlement proposal put forth by the shareholders of Essar Steel saying the offer violated Section 12A of the bankruptcy law.
The NCLT had said Rs 54,389-crore offer by Essar Steel Asia Holding, though much higher than ArcelorMittal’s Rs 42,000 crore bid, was not maintainable as the only way to make a proposal is through Section 12A.