ArcelorMittal May Pay Off Dues Of Uttam Galva As ‘Goodwill Gesture’
Any pay off towards outstanding dues of Uttam Galva would be a “goodwill gesture”, says ArcelorMittal
ArcelorMittal, the world’s largest steel maker, today asserted that its bid for debt-laden Essar Steel Ltd. is "eligible" and indicated that any pay off towards outstanding dues of Uttam Galva Ltd., a firm in which it was a minority shareholder till sometime back, would be a "goodwill gesture".
The committee of creditors had yesterday met representatives of ArcelorMittal and Numetal which are in the race to acquire the stressed asset regarding their eligibility.
"Our fundamental position is that we are eligible and in reality were never the promoters of these companies. So any discussion about repayment of any dues would be a gesture of goodwill," Brian Aranha, executive vice-president (strategy, technology, R&D) at ArcelorMittal, said here at the company's R&D facility.
The lenders earlier had objected to ArcelorMittal's investment in Uttam Galva on default of loan repayments to the tune of about Rs. 8,000 crore.
ArcelorMittal had written off investment of $150 million in 2015. The company has further interest in the investment, Aranha added.
He said ArcelorMittal had initiated the declassification process as Uttam Galva's promoter before submitting bid for Essar Steel but due to administrative delay, the declassification came after the bids submission.
ArcelorMittal had sold back its stake in Uttam Galva to its promoters to clear its bid under the Insolvency and Bankruptcy Code as Clause 29A of the code prevents promoters of defaulting companies from bidding for stressed assets.
ArcelorMittal is the most eligible bidder for Essar Steel. It has no equal in the game, Aranha said.
ArcelorMittal strongly believes its bid is eligible and any repayment discussion on outstanding dues of Uttam Galva will be a "goodwill gesture, a source said.
The company has an annual output to the tune of about 95 million tonnes with a presence in 60 countries, the source said, adding that the company, if selected, has plans to increase Essar Steel's capacity to 20 MT from the present about 6 MT besides developing a R&D unit in Hazira.
The minority shareholders of Uttam Galva had flagged concerns over declassification of ArcelorMittal as promoters of Uttam Galva.
ArcelorMittal, however, had rejected the allegations as "trivial attempts" designed to distract it from Essar Steel, claiming it is the most credible entity to takeover control of the debt-laden firm.
The shareholders of Uttam Galva had complained to SEBI and other regulatory authorities that ArcelorMittal Netherlands BV, a part of the Arcelor Mittal Group led by LN Mittal, became a promoter of Uttam Galva Steels Ltd in or around 2009 by way of acquiring shares of the company through an open offer.
They had alleged that the offer document clearly disclosed that ArcelorMittal had signed a co-promotion agreement with the existing promoters viz. Miglani family and obtained substantial management rights in the company.
"ArcelorMittal continued to be a promoter of the company thereafter and was disclosed as promoter in all filings made by the company to SEBI, Stock Exchanges both NSE and BSE, and the Ministry of Corporate Affairs, they had said.
They had further complained that In July 2011, ArcelorMittal, together with other promoters of the company, while taking a loan from a consortium of banks led by State Bank of India signed a Non-Disposal Undertaking in favour of State Bank of India, acting as facility agent in respect of a loan facility of Rs 1,400 crore.
ArcelorMittal had said, "We have spoken repeatedly about the Uttam Galva situation. We never had any management involvement, we had no board position and we have no shareholders in the company. The declassification was carried out in accordance with the processes of the stock exchanges.
"This is nothing more than another tiresome and trivial attempt to muddy the waters and distract from the central fact that ArcelorMittal, together with our partner Nippon Steel, is the most credible owner of Essar Steel given our superior track record and standing in the industry.
ArcelorMittal had bid for Essar Steel on Feb. 12.