Even before the eligibility test score is out, a war of words has broken out between the two bidders for Essar Steel -- Numetal and ArcelorMittal.
“We are confident about the integrity of the process, which will be adjudicated by the Resolution Professional. We continue to believe our bid is eligible and that as the world’s leading steel company in partnership with Nippon Steel
and Sumitomo Metals, we have unrivalled industry expertise and a demonstrable track record that is very relevant for Essar Steel
India Limited," a company statement said.
Sources close to the world's largest steel maker
also pointed out that Numetal wasn't the only company that had taken a legal opinion in the matter. ArcelorMittal's legal advisors had said that its bid was eligible.
The retort was in response to statements made by Abboud to the media that despite ArcelorMittal's lobbying with the Indian government, its "ineligible bid" should not be cleared as it does not meet the eligibility criteria as per the current Insolvency and Bankruptcy Code (IBC). He also said that Numetal had taken legal opinion from three different law firms and they are all of the opinion that ArcelorMittal
and its promoters' investments in two non-performing assets (NPAs) in India will debar it from bidding.
Sources close to ArcelorMittal
said, Numetal was not in a position to judge ArcelorMittal's eligibility. It was up to the resolution professional and its legal advisors to take a call on the matter.
Essar Steel's resolution professional was being advised by Cyril Amarchand Mangaldas on the eligibility of the two bids from Numetal and ArcelorMittal.
The issue with ArcelorMittal
is that ArcelorMittal
Netherlands BV held a 29.05 per cent stake as a co-promoter in Uttam Galva Steels, which is now an NPA. However, on February 7, the firm transferred its entire shareholding to Sainath Trading Company Private Limited by inter-se transfer at one rupee a share. Consequently, the co-promotion agreement with the Miglani family dated September 4, 2009, stood terminated.
ArcelorMittal's arguments are that it never had board representation or management control of Uttam Galva Steels. However, lawyers to Numetal point out that ArcelorMittal
has been promoter of a corporate debtor (Uttam Galva) for over one year prior to the commencement of the resolution process of Essar Steel
and the only way the person who is a promoter of a corporate debtor becomes eligible is if he/she makes payment of all overdue amounts with interest.
Apart from that, L N Mittal had a personal shareholding in KazStroy Services of Kazakhstan, an oil infrastructure provider company, which in turn had a 100 per cent stake in KSS Petron that turned an NPA in 2015. But here too, Mittal sold his shares in KSS before submission of the Essar bid. Some of the lenders had raised questions on the promoter status at the time of the company turning into an NPA and not the sale of shares but sources close to ArcelorMittal
said, the drafting of Section 29A was in present tense.
The questions around Numetal's eligibility are largely around the association of Rewant Ruia, son of Ravi Ruia, who had co-founded the Essar group.
Numetal is 40 per cent owned by the VTB group
and 25 per cent by an offshore trust where Rewant Ruia is a trustee.
Abboud said that he was open to discussiRuia's interest though it was in accordance with IBC norms. Sources close to ArcelorMittal
however questions whether the shareholding of the company could be changed after submission of bid.