ArcelorMittal has confirmed it will settle outstanding dues in two companies where it is a passive shareholder in order to become eligible to bid for Essar Steel as part of the insolvency process.
“While we have always believed our offer was eligible, as a demonstration of our commitment to India and Essar Steel we have indicated to the Committee of Creditors our readiness to settle outstanding dues of companies where we only had a passive shareholding,” the company said in an emailed statement. “We would hope that this very serious offer would be given appropriate consideration and that we will be identified as the preferred bidder for the asset.”
ArcelorMittla has transferred Rs 7,000 crore to an escrow account controlled by State Bank of India, BloombergQuint had earlier reported. The funds are to be used to extinguish outstanding dues in Uttam Galva Steels Ltd. and KSS Petron Ltd. Today's statement is confirmation of the development.
The multinational steel giant’s bid for Essar Steel was deemed ineligible by lenders on the grounds that ArcelorMittal was liable—as a promoter of KSS Petron and Uttam Galva—to repay dues to lenders of both companies.
ArcelorMittal had participated in the resolution process in "good faith", the statement said. "In our view, it is critical for the credibility of the IBC that the process is followed fairly and correctly as originally laid out," it added.
The Ahmedabad bench of the NCLT, in April, had said that a bidder disqualified for being a promoter of a defaulting company can repay any outstanding dues and become eligible for the bidding process. The bench’s order had come in response to a dispute raised by ArcelorMittal against the lenders’ decision to label it ineligible. The NCLT pointed out Section 30(4) of the IBC, where a bidder may be provided a period of 30 days to clear any such dues.