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Minority shareholders of Uttam Galva allege violation of loan agreement

Arcelor terms latest challenge as trivial attempt to muddy the waters

Ishita Ayan Dutt  |  Kolkata 

Steel makers, metal, industry, steel firms

Ahead of the on Monday, of have written to lenders, the Securities and Exchange Board of India (Sebi) and stock exchanges, alleging that did not follow the terms of a loan agreement with lenders, which required it to seek prior permission for the sale of shares in the company. hit back saying the latest challenge is nothing more than another “tiresome and trivial attempt to muddy the waters”.

The letter mentions that in July 2011, ArcelorMittal, together with other promoters of the company signed a non-disposal undertaking in favour of (SBI) while taking a loan from a SBI-led consortium.

Uttam Galva Steels, according to the letter, had agreed that it would not recognise or register any transfer of shares held by without the approval of declined to comment on the matter. Shareholders were likely to legally challenge the matter, sources close to the development said. The same set of shareholders had last week moved the (SAT) against the stock exchanges’ approval for declassificaton of as a promoter of

However, refused any immediate stay on the matter. According to the order, the transfer of shares from to Sainath being an inter-se transfer between promoters, it appeared, prima facie, that an approval from the shareholders would not apply to the current case. had transferred its shares in on February 7 in an inter-se transfer to a Miglani group company, Sainath Trading Company, ahead of the Essar Steel bidding on February 12.

However, the LN Mittal-led company retained its promoter status in the records of stock exchanges, and the company was declared ineligible in the first round on technical grounds. It has, however, been declassified by the stock exchanges since. “We have spoken repeatedly about the Uttam Galva situation. We never had any management involvement, we had no board position and we have no shareholding in the company. The declassification was carried out in accordance with the processes of the stock exchanges. This is nothing more than another tiresome and trivial attempt to muddy the waters and distract from the central fact that ArcelorMittal, together with our partner Nippon Steel, is the most credible owner of Essar Steel, given our superior track record and standing in the industry,” said. Both and will participate in the rebids on Monday. Numetal, will, however, submit its bid in a revised corporate structure.

is being dropped from the structure to make eligible. is an offshore trust, with Rewant Ruia, part of the promoter family, as a beneficiary. The shareholding will be divided among existing shareholders. VTB in the earlier format was the major shareholders.

According to a new legal addendum to the new process, bidders are obliged to legally confirm that the promoter family would have no involvement in the consortium either directly or indirectly. A legal declaration has to be signed to this effect, said sources close to the development.

was ineligible in the first round because of the company’s connection with the promoter. However, has challenged its rejection of bid in the National Company Law Tribunal’s Ahmedabad Bench. ArcelorMittal, too, has challenged the decision to declare it ineligible.

First Published: Mon, April 02 2018. 06:56 IST
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