Essar Steel case: SC to hear ArcelorMittal's plea against NCLAT order today

NCLAT had asked steel giant to pay dues linked to Uttam Galva and KSS Petron by Tuesday

The Supreme Court on Tuesday agreed to hear on Wednesday a plea by ArcelorMittal, challenging the National Company Law Appellate Tribunal (NCLAT) order directing it to clear dues of two defaulting firms — Uttam Galva and KSS Petron — by Tuesday to be an eligible bidder for Essar Steel.

Arcelor had asked for an urgent hearing on Tuesday but the apex court Bench decided to hear the plea on Wednesday.

The L N Mittal-headed global steel maker, however, had written to the resolution professional (RP) for Essar on Monday asking him to confirm the overdue amounts of Uttam Galva and KSS Petron as well as the modalities of payment. There are 17 banks in the Uttam Galva consortium. Apart from making a commitment to pay the dues, Arcelor had also revised its offer in the second round on Monday by around 31 per cent to Rs 420 billion. 

Arcelor’s revised offer was a bid to pip rival bidder Numetal’s Rs 370 billion offer. 

An Arcelor spokesperson said, “The revised offer includes a commitment to repay Uttam and KSS Petron debts in full. It, therefore, represents a compelling opportunity for Indian state banks to recoup the maximum amount of money possible.”

Luxembourg-headquartered ArcelorMittal on Tuesday informed stock exchanges that it had submitted a revised proposal to Essar Steel India Limited's (ESIL's) committee of creditors (CoC) for the acquisition of ESIL.

The company also confirmed that the financial value of the revised offer was broadly accurate. While Arcelor committed to making the payment, the letter to the RP had said that it reserved its right to avail appellate remedies against the NCLAT order. NCLAT had found Numetal’s second bid to be valid. The third bidder, Anil Agarwal, had offered Rs 340 billion. The second round of bids for Essar opened on Monday. 

Lenders had met after the second round of bids opened. However, the meeting was inconclusive. 

Arcelor and Numetal had challenged the National Company Law Tribunal (NCLT) Ahmedabad bench order in the NCLAT. The  Ahmedabad bench had remanded the first round of bids in Essar to the RP and CoC for reconsideration as the bidders had not been given time to “cure” their ineligibility by paying dues.

The RP had found Arcelor and Numetal to be ineligible in the first round. ArcelorMittal was disqualified on technical grounds because it had sold its shares in Uttam Galva prior to the submission of bid but continued to be a promoter of the company in the records of the stock exchanges. Numetal was disqualified on grounds of Rewant Ruia’s exposure in the consortium. Rewant is the son Ravi Ruia, who is a promoter of Essar.

In line with the NCLT order, lenders had given the two bidders time to “cure” their ineligibility. ArcelorMittal had made a conditional offer to the lenders that it would have to be declared a successful and eligible bidder for Essar and had parked Rs 70 billion in a current account of an overseas branch of SBI.

Money matters

• Arcelor’s revised offer was a bid to pip rival bidder Numetal’s Rs 370-billion offer 

• NCLAT had found Numetal’s second bid to be valid. The third bidder, Anil Agarwal, had offered Rs 340 billion 

• On Monday, Arcelor wrote to Essar CoC committing to pay the dues and revising the offer to Rs 420 billion