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

Press Trust of India  |  New Delhi 

The lenders of 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 (CoC) submission before a (NCLAT) implied that only Rs 39,500 crore would be available for distribution among the financial creditors and operational creditors.

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

In Monday's hearing, Standard Chartered, one of the secured financial creditors, claimed that bankers have clubbed Orissa Slurry (OSPL) with 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 and is not part of it.

"It is a fact that in the offer was made for Rs 42,000 crores. But in the final judgment, the 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."

According to him, this Rs 2,500 crore is the minimum guarantee to the creditors of Essar Steel irrespective of whether the company is in profit or loss during the pendency of the insolvency resolution process.

"We wanted a guarantee that if it was a minus, at least Rs 2,500 crore you must commit. If, however, there is actually profit, whatever is actually profit, will be given to lenders. We said alright," he said.

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."


A two-member NCLAT bench headed by Justice S J Mukhopadhaya also directed the CoC to submit a distribution chart of the money coming from

Over claims of the Bank, the CoC said it is a secured financial creditor and "one among us" but the flow of money given by it was outside

"We agree that is a secured creditor," said Subramanium, adding that their justification for giving the money was of totally different in nature.

"The money was transferred from to a Mauritian entity for a US-based step down unit," he said adding "in normal circumstances, we would have given money to them."

The matter would now come on May 20 before the NCLAT for hearing and may argue its side on that day.

Over the issue of OSPIL, Subramanium said that it was a step-down firm and separate insolvency is going for that.

"Orissa Slurry would not be a part of this resolution procees, he said adding "Bhubaneshwar-based (NCLT) has already admitted Insolvency proceedings against it on May 13."

Earlier, appearing on behalf of had alleged before the NCLAT that is in effect paying Rs 39,500 crore and not Rs 42,000 crore for buying Essar Steel as the remaining sum is being adjusted towards outstanding of an associate business.

Standard Chartered, which is seeking to be treated at par with the secured financial creditor for its claim, said bankers have clubbed OSPL with Essar Steel.

OSPIL, Sibal said, is a separate entity owned by and Essar Steel, and was not part of the original offer to sell Essar Steel. Clubbing it with Essar Steel in the sale would benefit Lakshmi Mittal-run firm, he said.

Sibal argued that acceptance of Rs 39,500 crore as the bid amount by the CoC of Essar Steel is contrary to the undertaking given by ArcelorMittal to the

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

First Published: Thu, May 16 2019. 19:56 IST
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