Rs 2,500 cr in ArcelorMittal bid for Essar Steel is for working capital: CoC to NCLAT

The lenders of Essar Steel Thursday informed the NCLAT that out of Rs 42,000 crore coming from the resolution plan of ArcelorMittal, Rs 2,500 crore has been marked as the working capital of the debt-laden firm.

The Committee of Creditors (CoC) submission before a National Company Law Appellatre Tribunal (NCLAT) implied that only Rs 39,500 crore would be available for distribution among the financial creditors and operational creditors.

Senior advocate Gopal Subramanium representing the CoC informed the appellate tribunal that the actual upfront amount is Rs 39,500 crore and the rest Rs 2,500 crore has been committed as working capital for Essar Steel.

In Monday's hearing, Standard Chartered, one of the secured financial creditors, claimed that bankers have clubbed Orissa Slurry Pipeline Ltd (OSPL) with Essar Steel in the auction to recover unpaid loans.

It alleged that Rs 2,500 crore, which should have been paid to Standard Chartered, has been diverted to lenders of OSPL.

On this, the COC clarified that the current resolution plan is only for Essar Steel Ltd and OSPIL Ltd is not part of it.

"It is a fact that in the Supreme Court offer was made for Rs 42,000 crores. But in the final judgment, the Supreme Court only referred to the previous offer of Rs 35,000 crore. Ultimately, after a lot of discussion it was raised to Rs 39,500 crore," Subramanium submitted.

He further said: "Then there was a discussion on working capital. We said please guarantee Rs 2,500 crore. So total upfront payment is Rs 42,000 crore."
Subramanium added: "If it is negative, there is Rs 2,500 crore and . Whatever excess of Rs 2,500 crore is there, it would be given back to the creditors."
"The money was transferred from India to a Mauritian entity for a US-based step down unit," he said adding "in normal circumstances, we would have given money to them."
"Orissa Slurry would not be a part of this resolution procees, he said adding "Bhubaneshwar-based National Company Law Tribunal (NCLT) has already admitted Insolvency proceedings against it on May 13."