The world’s largest steelmaker ArcelorMittal has transferred Rs 7,000 crore to State Bank of India (SBI) to clear bank dues of loan defaulter Uttam Galva Steels so that it becomes eligible to bid for acquisition of Essar Steel, a person in know of the development said.
India’s new bankruptcy law is being bogged down by bitter court room disputes that include the likes of ArcelorMittal and the Tata Group — jeopardizing the law’s promise of time-bound resolution in a country famous for its sluggish legal system.
Steel tycoon Lakshmi N Mittal’s son Aditya Mittal has said he is working “very closely” with his father to shape the future direction of ArcelorMittal and is looking for strategic global opportunities rather than just expansion for the sake of expansion.
The world’s largest steel maker ArcelorMittal today asserted that its bid for debt-laden Essar SteelNSE 0.00 % is “eligible” and indicated that any pay off towards outstanding dues of Uttam Galva, a firm in which it was a minority shareholder till sometime back, would be a “goodwill gesture”.
The first round of resolution plans submitted for Essar Steel Ltd saw ArcelorMittal India offer greater value than competitor Numetal Mauritius, bankers in the know told BloombergQuint on condition of anonymity.
ArcelorMittal and Numetal Mauritius must clear debts in defaulting companies where they hold stakes before bidding for Essar Steel Ltd, and merely selling stakes in those companies won’t make them eligible, details from the bankruptcy court’s Thursday order show.
ArcelorMittal possibly faces a dues bill of over Rs 7,000 crore, to clear the eligibility hurdle in its bid for Essar Steel. The Ahmedabad bench of National Company Law Tribunal in its order last week observed that promoters of defaulting companies will have to clear outstanding loans to submit resolution plans.