RPMG Investment LLP has turned out to be the sole bidder for stressed corporate debtor KazStroyService (KSS) Petron.
RPMG had provided the resolution professional (RP) appointed for KSS Petron with an expression of interest (EoI) before the deadline of June 10. However, sources said that the participation fees for the EoI were not received on time and this could jeopardise the bidder’s eligibility.
KSS Petron, a subsidiary of Kazakhistan-based KSS, was admitted for corporate insolvency resolution process (CIRP) on August 1, 2017, under the Insolvency and Bankruptcy Code (IBC). On Tuesday, one of the company’s financial creditors moved an application before the National Company Law Tribunal (NCLT) in Mumbai, opposing the resolution plan put forth so far. In accordance with the IBC rules, RPMG Investments had to submit a resolution plan for KSS Petron India, which it did on June 5. “On June 21, the fate of the main company application and whether the resolution plan should be admitted will be decided,” the single bench of the Mumbai NCLT said.
ArcelorMittal promotor L N Mittal earlier owned a 33 per cent stake in KSS, which fully owns KSS Petron India. ArcelorMittal and VTB-Capital owned Numetal are in the race to bid for Essar Steel, a steel giant admitted under the IBC.
Over the past few months, ArcelorMittal and Numetal have been in war of words with each side trying to undermine the others’ eligibility to bid for the stressed steel giant.
According to Section 29A of the IBC, relatives of a promoter of an existing stressed company, persons connected to or related parties of the company are barred from participating in the bidding process.
In the case of Numetal, Rewant Ruia was listed as a beneficiary of a trust which held a 25 per cent stake in Numetal. Rewant is a member of the Ruia family, former promoters of Essar Steel. This made the company ineligible to bid for Essar Steel. Thereafter, Numetal dropped Rewant Ruia from the trust.
In the case of ArcelorMittal and its promoter L N Mittal, the former held a 29 per cent share in Uttam Galva Steels, which is also facing IBC proceedings.
LN Mittal had a personal stake of 33 per cent in KSS, the holding company which owned the entire KSS Petron. The fact that ArcelorMittal and its promoter held significant shareholdings in both Uttam Galva Steels and KSS Petron affected their eligibility to bid for Essar Steel.
Therefore in February, just before the first round of bidding was opened, both ArcelorMittal and LN Mittal sold their respective shareholdings in Uttam Galva Steels and KSS so as to remain eligible.
However, on April 19, the Ahmedabad bench of the NCLT directed both Numetal and ArcelorMittal to repay their outstanding debts. In the case of Numetal, the firm would have to shell out Rs 400 billion to regularise loan accounts connected to Ravi Ruia, the founder promoter of Essar Steel.
In response, Numetal has filed an appeal challenging this order with the National Company Law Appellate Tribunal (NCLAT) in New Delhi.
A lawyer, who is closely following the issue, told Business Standard,“If the NCLAT finds that ArcelorMittal and its promoter are connected to Uttam Galva Steels and KSS Petron, the CIRP process for both the companies will continue according to the procedure. This could mean liquidation.” ArcelorMittal parked Rs 70 billion in an escrow account with the State Bank of India (SBI) in London. The fund will be used to clear dues owed to the financial creditors of both the corporate debtors. This transfer is purely conditional on ArcelorMittal’s eligibility to bid for Essar Steel. Of the Rs 70 billion, Rs 50 billion will go towards clearing Uttam Galva’s dues while Rs 20 billion will be kept for KSS Petron’s lenders, the lawyer added.
KSS Petron has an outstanding debt of Rs 9 billion, which it owes to financial creditors while the company owes its operational creditors Rs 4 billion, according to an official legal document on the company’s website.