Russia’s VTB Capital-backed NuMetal Ltd. has moved the National Company Law Appellate Tribunal against an order allowing rival ArcelorMittal to clear bank dues of associate companies so that it can become eligible to acquire Essar Steel.
NuMetal said the Ahmedabad-bench of National Company Law Tribunal had disqualified ArcelorMittal India Ltd. from bidding to acquire Essar Steel on grounds that it was a promoter company of firms that had defaulted on payment of bank loans. However, it “erred” in permitting ArcelorMittal to “to cure the ineligibility by making payment of the overdue amounts of Uttam Galva and KSS Petron” within 30 days, it said in the petition.
The NCLAT here is likely to hear the petition tomorrow. That’s also when the panel of lenders to Essar Steel are also slated to meet to decide if fresh bids are to be called for.
Allowing ArcelorMittal to clear dues was not in accordance with the law, the petition stated. Essar Steel had a debt of Rs 49,000 crore and was referred to NCLT in June last year.
NuMetal sought setting aside and quashing of the NCLT order that directed the resolution professional (RP) to reconsider the resolution plan submitted by ArcelorMittal. A committee of Essar Steel creditors had earlier this week failed to reach a decision if the first round of bids put in by ArcelorMittal and NuMetal should be considered or fresh bids sought.
Last week, the Ahmedabad bench of the NCLT had asked the lenders to reconsider the first bids submitted by Numetal and ArcelorMittal on Feb. 12. It rejected a second round of bids submitted as well as mining baron Anil Agarwal's Vedanta on April 2. It had also asked the RP and the lenders to give 30 days' time to these bidders to clear their defaulted accounts.
ArcelorMittal's eligibility was questioned because it had held a stake in Uttam Galva Steels Ltd, which is classified as a delinquent borrower. NuMetal was also considered ineligible because its backers include a company controlled by the son of a billionaire Essar Steel founder.
Luxembourg-based ArcelorMittal is partnering with Nippon Steel & Sumitomo Metal Corp, Japan's top mill, to bid for Essar Steel. “There seems to be no end to the lengths Numetal will go to prevent ArcelorMittal being selected as the new owner for Essar Steel,” a source close to ArcelorMittal told PTI. “Media reports suggest ArcelorMittal has made a superior offer and they have always maintained they are eligible.”