ArcelorMittal commits to pay dues, files revised bid for Essar Steel

New Delhi : Emphasising its commitment to clear its dues on Uttam Galva and KSS Petron, ArcelorMittal on Monday said it has submitted a substantially higher bid to the Committee of Creditors (CoC) of insolvent Essar Steel.

Last Friday, National Company Law Appellate Tribunal (NCLAT) had ruled that ArcelorMittal must pay its dues by Tuesday to enable consideration of its bid along with resolution plans of other contenders, Numetal and Vedanta Resources.

"ArcelorMittal confirms that it submitted today (Monday) a revised proposal to Essar Steel India Limited's (ESIL) Committee of Creditors for the acquisition of ESIL. The financial terms of the proposal are confidential, but represent a material increase on our previous offer," ArcelorMittal said in a release.

The revised bid by the world's largest steelmaker is believed to be Rs 42,000 crore compared with Rs 37,000-crore bid submitted in the second round of bidding by Numetal, a consortium led by Russia's VTB Bank.

"The revised offer, which includes a commitment to pay the entire amount due to the financial creditors of Uttam Galva and KSS Petron, therefore represents unprecedented value to all creditors concerned," the Lakshmi Mittal company said.

The commitment by ArcelorMittal to pay the outstanding dues of Rs 7,000 crore on Uttam Galva and KSS Petron is learnt to be separate from its bid of Rs 42,000 crore.

"Through the revised offer ArcelorMittal demonstrates its serious commitment to India, creditor banks and all ESIL's stakeholders," it added.

While ArcelorMittal got conditional approval last week, Numetal's bid filed in the second round on March 29 was found eligible as by then it had restructured its shareholding composition by removing the stake of Essar Steel promoter's son.

The first bid of both Numetal and ArcelorMittal were rejected by the CoC, the lenders of Essar Steel, as they violated Section 29A of the Insolvency and Bankruptcy Code (IBC), which disqualifies a promoter of NPA from submitting a resolution plan.

ArcelorMittal was asked to clear its dues of about Rs 7,000 crore related to Uttam Galva and KSS Petron, of which it was a promoter when these turned non-performing assets (NPA), in three working days that end on September 11.

Though ArcelorMittal is yet to actually transfer the dues to the creditors of Uttam Galva and KSS Petron as required by the bankruptcy court, it is learnt that it has initiated the process with the creditors and sought instructions for doing the same.

The NCLAT, on Friday, had allowed the CoC to deduct the litigation period between April 26 and September 7 from the resolution period that gives 270 days to resolve a case after which the company is considered for liquidation.

In its judgment, the bankruptcy court had also allowed the CoC to negotiate with the bidders to get the best value for the stressed asset. The financial creditors claim on bankrupt Essar Steel is to the tune of Rs 50,000 crore.