ArcelorMittal Chairman L N Mittal has sold his 33 per cent personal holding in KazStroyService (KSS), an oil infrastructure provider company based in Kazakhstan, in an effort to put to rest questions on his eligibility to bid for stressed assets.
Domestic lenders, led by the State Bank of India, had asked Mittal to repay KSS Petron’s debts of Rs 13.40 billion after the latter defaulted on its loans in India earlier last month.
Even though the shareholding in KSS was Mittal’s personal holding, he did not want the matter to be a sticking point in ArcelorMittal’s bid, sources said.
The Essar Steel bids are yet to be opened and sources close to the development said the bids of ArcelorMittal India and Numetal, a consortium in which VTB Bank has a majority stake and the Ruias a minority holding, could be opened on Wednesday.
Mittal’s share sale in KSS comes after thke transfer of ArcelorMittal’s 29 per cent stake in Uttam Galva Steels to co-promoters at Rs 1 a piece on February 7, resulting in the termination of the co-promotion agreement of 2009.
Mittal had bought the Uttam Galva shares at Rs 120 a share.
That transaction, too, became necessary because Uttam Galva is a loan defaulter and was referred to the National Company Law Tribunal for debt resolution.
Though ArcelorMittal had no representation on the board of directors of Uttam Galva and was not involved in the latter’s management decisions, it was a co-promoter.
When the Insolvency and Bankruptcy Code was amended in November, Section 29A was added and it said a person would not be eligible to submit a resolution plan “if the person, or any other person acting jointly with such person, or any person who is a promoter or in management of such person, is an undischarged insolvent”. This prohibits promoters or sister concerns of companies with NPAs of more than a year from taking part in auctions.
However, it remains to be seen what view the committee of creditors and the resolution professional take on ArcelorMittal bid for Essar Steel. Some lenders said they would look at the promoter status when the loans turned into NPAs.