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MCA may order management change in Essar Steel

IANS  |  New Delhi 

After more than a year, the long-drawn resolution process of seems to be finally moving towards closure with the ready to order a change in the management of the insolvent maker.

The move comes even as a fresh petition was filed before the (NCLAT) by MD Prashant Ruia, executives, as well as the Standard Chartered Bank, seeking to set aside the ArcelorMittal's winning bid approved by the Ahmedabad bench of the NCLT.

The resolution plan for Essar Steel, which has been facing bankruptcy proceedings since August 2017, was approved by the (NCLT) last Friday. It accepted ArcelorMittal's 42,000 crore bid for the debt-laden

sources said the is waiting for the written order from the NCLT after which it would approve and order a management change in "This may take a day or two," said the source.

The legal contentions against the takeover can continue later, said the

The NCLAT is set to hear the petitions against ArcelorMittal's winning bid on Thursday. The appellate court's order is awaited.

The NCLT's decision paves the way for world's largest ArcelorMittal's entry into The steel company run by Lakshmi has been trying enter the Indian market for more than a decade.

Indian-born Mittal's steel company is the world's largest by volume but, ironically, doesn't have a to its name in his homeland.

The NCLT bench approved ArcelorMittal's resolution plan, which was voted as the winning bid in October 2018 by the (CoC) and which included an upfront payment of 42,000 crore and a post-deal infusion of 8,000 crore in Essar Steel.

The NCLAT had last month directed the NCLT Ahmedabad bench to take a final decision on ArcelorMittal's bid for the acquisition of Essar Steel by March 8, failing which it would pass an order itself.

While the NCLT verdict came as a major setback to the Ruias, who wanted to retain control of the company and had offered Rs 54,389 crore after the CoC approved ArcelorMittal's bid, the promoters of Essar Steel believe they still have a chance.

The Ruias are not yet ready to surrender the 10-million tonne steel mill, which owes Rs 49,000 crore to financial creditors. They have filed an appeal in the NCLAT and if needed, may even approach the Essar's earlier appeal in these courts had been dismissed.

ArcelorMittal, in a joint venture with Japan's Nippon Steel & Sumitomo Metal Corp., has offered an upfront cash settlement of Rs 42,000 crore to lenders and a Rs 8,000 crore capital infusion.

The world's largest steel maker is also planning a Rs 18,697 crore capital expenditure programme for the asset till 2024, according to its 2018 annual report.

In its order, the NCLT has also ordered to offer 15 per cent of the upfront cash settlement of Rs 42,000 crore, or Rs 6,300 crore, to operational creditors.

The original resolution plan only offered Rs 196 crore to operational creditors against claims of Rs 4,976 crore. The NCLT order means financial creditors -- "the banks" -- will have to take a deeper haircut on the asset.



(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, March 14 2019. 17:14 IST