ArcelorMittal moves NCLT against bar on Essar Steel bid
27 March 2018
ArcelorMittal on Monday moved the Ahmedabad bench of the National Company Law Tribunal (NCLT) seeking a remedy against the Essar Steel bankruptcy resolution professional’s decision to declare it ineligible to participate in the Essar Steel auction.
The Lakshmi Mittal company contends that it has been declassified as promoter of another non-performing asset Uttam Galva and hence is eligible to bid for Essar Steel.
“ArcelorMittal has always firmly believed and continues to believe that our strong and competitive bid for Essar Steel India, submitted on 12th February, was fully eligible and therefore should have been placed before the Committee of Creditors by the Resolution Professional,” the company said in a statement.
The steelmaker, however, received a letter from the resolution professional stating that its bid was being disqualified on technical grounds since it was still a promoter of Uttam Galva Steels Ltd, it said in a statement released on Monday.
ArcelorMittal India was a co-promoter of Uttam Galva Steel Ltd with a 29-per cent stake. The company has been declared a non-performing asset and is currently facing insolvency proceedings. That would make it ineligible for bidding under the amended bankruptcy law.
The Indian arm of the Luxembourg-based company, however, said its resolution plan was eligible in the form that it was first submitted on 12 February.
“However, we received formal notification on 23rd March that our bid was deemed ineligible due to the technicality of still being a promoter of Uttam Galva on the stock exchange, even though we had sold our shareholding before submitting our offer.
“Furthermore, the stock exchanges have confirmed that ArcelorMittal was declassified as a promoter of Uttam Galva. We have therefore today (Monday) 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,” it added.
Another bidder for Essar Steel, Numetal, has already moved the NCLT, and its case is to be taken up today.
Industry executives are now keeping their eyes focused on the 2 April deadline for the second round of bidding for Essar Steel.