This story is from May 16, 2018

Arcelor parks Rs 7,000 crore for Essar Steel bid eligibility

Arcelor parks Rs 7,000 crore for Essar Steel bid eligibility
MUMBAI: ArcelorMittal is leaving no stone unturned in its bid for Essar Steel. In an attempt to become eligible to acquire the bankrupt company, the Lakshmi Mittal-led ArcelorMittal has transferred nearly Rs 7,000 crore to an escrow account controlled by SBI to clear all outstanding dues related to two non-performing assets (NPAs) in which the Luxembourg-based metals company had investments.

The one thing that went against ArcelorMittal in Essar Steel's bidding rules was that it was a promoter of two NPAs - Uttam Galva Steels and KSS Petron. Though ArcelorMittal had divested its interest in the two companies before making an offer for Essar Steel, bankruptcy rules require that the defaulting promoter should also clear all pending dues related to the NPAs.
ArcelorMittal said that though it continues to believe that it is eligible to bid for Essar Steel, any offer to pay the outstanding loans of the companies where it only had a passive stake with no management or governance role is to "demonstrate the seriousness of its commitment to India and Essar Steel".
ArcelorMittal, the world's No.1 metal producer, has been trying to expand in India, one of the most lucrative markets globally, for many years. If ArcelorMittal's bid for Essar Steel is successful, then the latter will be a major platform for the metal giant in the country where demand for the alloy is predicted to triple to 300 million tonnes by the end of the next decade.
ArcelorMittal transferred the money after Essar Steel creditors gave defaulting promoters, including Numetal, the second bidder, a week's time to clear pending dues in order to become eligible to bid for the insolvent asset. The last day to clear Arcelor-Mittal and Numetal's names was Tuesday, May 15. Essar Steel creditors gave time to both the bidders according to the directions of a bankruptcy court that said that bidders disqualified on the grounds of being a promoter of a defaulting company can become eligible if they settle outstanding dues.
Numetal, which is majority owned by Russia's VTB Bank, too said that it remains eligible to bid for Essar Steel. The Mauritius-based bidder also said that neither the company nor its shareholders including Aurora Enterprises, which had a 25% stake in Numetal, and its beneficiary - Rewant Ruia, the son of Essar Steel's co-founder - have any loans overdue with any creditors in India. Numetal was disqualified as Rewant Ruia was connected to Essar Steel and rules restrict defaulting promoters from bidding for their own companies.
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About the Author
Reeba Zachariah

Reeba Zachariah is assistant corporate editor at The Times of India, Mumbai. She has been covering large Indian business houses such as the Tata Group. She also reports on a host of sectors like hospitality, retail, travel, liquor and consumer durables. She has been writing on mergers and acquisitions and private equity.

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