ArcelorMittal, the world’s largest steelmaker, has made a strong pitch as an eligible bidder for distressed assets currently going through insolvency resolution.
It issued a statement that recent amendments to the Insolvency and Bankruptcy Code
were intended to prevent defaulting promoters from buying the same assets out of bankruptcy.
“We are a widely recognised and highly creditworthy international investor and do not believe this amendment should prevent ArcelorMittal
from bidding for distressed steel assets in which we have had no prior involvement,” went the statement.
It also clarified, “We hold a non-controlling minority shareholding in Uttam Galva, have no representation on the board of directors, nor influence on management decisions. As such, we are not a promoter of Uttam Galva.
Therefore, there is no objective reason for ArcelorMittal
to be prevented from bidding for any steel asset under the restructuring process.”
The statement follows doubts raised regarding its bid after the recent amendments to the IBC
through an ordinance, that not only barred defaulting promoters but added a new Section 29A. This prohibits promoters or sister concerns of companies
with non-performing assets (NPAs) of more than a year from bidding for these companies.
To bid, promoters have to make the NPAs standard assets by paying the principal and interest.
In 2009, ArcelorMittal
had bought a stake in Uttam Galva
Steels. Last September, however, Uttam Galva
was classified as an NPA and is in the Reserve Bank of India’s second list of major ones in this regard. Two credit rating agencies, CRISIL and ICRA, have been appointed by the central bank to vet Uttam Galva’s restructuring proposal.
Netherlands BV is, according to the shareholding pattern filed with the BSE, classified as a promoter group company of Uttam Galva
Steels, with 29.05 per cent stake, though it doesn’t have a board or management representative and is a passive shareholder.
After the ordinance, resolution professionals are in the process of preparing to see that prospective bidders fulfill the terms under Section 29A. “We are in the process of writing to all the prospective bidders for an undertaking that they meet the terms under this section. Once they furnish this, due-diligence will be done,” said the resolution professional for a stressed steel asset.