In yet another hurdle for ArcelorMittal in its race to acquire Essar Steel, the resolution professional (RP) of Pramod Mittal’s GPI Textiles has written to the Committee of Creditors (CoC) of Essar Steel, saying that ArcelorMittal should also pay the firm (GPI Textiles) its dues.
Pramod is the younger brother of LN Mittal.
The RP of GPI Textiles has also filed a caveat in the National Company Law Tribunal (NCLT) asking for a hearing before it clears the ArcelorMittal proposal.
Since Pramod is the younger brother of LN Mittal, he will be in the relative category, according to Section 29A of the Insolvency and Bankruptcy Code.
Other than GPI Textiles, Pramod Mittal-owned companies — Gontermann Peippers, Ispat Profiles and Balasore Alloys — owe money to public sector banks.
When contacted, an ArcelorMittal spokesperson declined to comment. But a source in ArcelorMittal said, “The company has already said on several occasions that there is absolutely no connection between ArcelorMittal’s eligibility and the businesses of LN Mittal’s brothers. The fact that ArcelorMittal has been selected highest (H1) bidder by the CoC of Essar Steel demonstrates that it has done what was required to satisfy the eligibility criteria.”
The relations between the Mittal brothers was also raised in the Supreme Court by Numetal. The Supreme Court, in its order dated October 4, said, “We have been informed by (Harish) Salve that Pramod Mittal parted ways with LN Mittal as far back as 1994, and cannot therefore be regarded as a person acting in concert with LN Mittal. Since this aspect of the case has not been argued before the authorities, though raised by Numetal before the Appellate Authority, we will not countenance such an argument for the first time before this court.” Harish Salve was the senior advocate to ArcelorMittal.
The SC then ordered ArcelorMittal to first pay the dues of the two defaulting companies – Uttam Galva Steels and KSS Petron – before becoming eligible to bid for Essar Steel. It ordered Numetal also to clear dues. With no clear directions from the apex court, lenders of Pramod’s companies are expected to raise the default issue before the NCLT and National Company Law Appelate Tribunal. The new hurdle for ArcelorMittal comes at a time when Essar Steel’s banks are voting on the proposals made by ArcelorMittal and Vedanta. While ArcelorMittal has offered Rs 390 billion to banks, Vedanta has offered Rs 340 billion. Both have promised to infuse additional funds into the company. The voting results are expected on Thursday.
The letters by the RP of GPI Textiles means that more litigation is in store as the lenders to Pramod’s companies would try to get their funds from ArcelorMittal which paid around Rs 75 billion for the dues of Uttam Galva and KSS Petron.