New Delhi: In a letter addressed to the resolution professional (RP) and the committee of creditors (CoC) conducting the auction of Essar Steel to recover over ₹ 49,000 crore of unpaid loans to banks, VTB Capital-backed Numetal on Monday questioned the eligibility of ArcelorMittal . This comes at a time when the matter is to be heard by the Supreme Court on Tuesday.
Numetal has sought clarification on a number of questions pertaining loan defaults by firms owned by Pramod Mittal and Vinod Mittal, the brothers of L.N. Mittal, the promoter of ArcelorMittal.
“Please confirm if these facts have been disclosed by ArcelorMittal and if the same has been disclosed- in what manner has the same been taken into consideration by the CoC. We request you to confirm whether the above mentioned facts have been verified by you to determine eligibility of ArcelorMittal India Private Limited as a Resolution Applicant under 29A," said Numetal in its letter which has been seen by Mint.
The questions were pertaining loan defaulting firms- Gontermann Peipers, Ispat Profiles India Limited, Chhatisgarh Energy Limited, Balasore Alloys Ltd and GPI Textiles Ltd. Numetal has sought responses on the kind of association Mittal brothers had with these firms.
The letter also claims that Pramod Mittal is facing cheating and fraud charges for loss of over ₹ 2,000 crore caused to government-owned State Trading Corporation. “ Please confirm if this fact had been disclosed by ArcelorMittal and if the same has been disclosed in what manner has the same been taken into consideration by CoC," the company said.
“There is absolutely no connection between ArcelorMittal’s eligibility and the businesses of Mr Mittal’s brothers. As previously acknowledged by the resolution professional, this has no relevance to the eligibility or ability of ArcelorMittal to participate in the resolution process for Essar Steel," said a spokesperson for ArcelorMittal while responding to queries from Mint.
“It is in fact a tiresome and trivial attempt to distract from the central fact that ArcelorMittal is the most credible owner of Essar Steel and that we have the most compelling offer on the table for all stakeholders, particularly financial creditors," the spokesperson added.
On 15 September, ArcelorMittal also wrote a letter to the RP targeting rival bidder Vedanta over its alleged violation of environmental law and human rights but shortly thereafter withdrew the letter.
The National Company Law Appellate Tribunal (NCLAT) on 7 September, ruled that second round bids put in by Numetal and Anil Agarwal’s Vedanta for acquisition of debt-ridden Essar Steel are valid but that of ArcelorMittal is contingent upon the company clearing ₹ 7,000 crore dues of Uttam Galva and KSS within three days.
On 11 September, ArcelorMittal SA, the world’s largest steel maker, sharply raised its bid to acquire debt-laden Essar Steel Ltd to ₹ 42,000 crore, a person with direct knowledge of the matter told Mint.
Anil Aggrawal’s Vedanta Ltd is the third qualified bidder for Essar Steel, whose lenders had initiated insolvency proceedings for recovery of around ₹ 49,000 crore in dues.
Numetal and steel tycoon Lakshmi Mittal-led ArcelorMittal had in February submitted separate bids to takeover Essar Steel. The committee of creditors, however, disqualified both bids, saying their promoters were tied to companies, which were bank loan defaulters, and hence they were ineligible under Section 29A of the Insolvency and Bankruptcy Code.
Numetal was disqualified on the grounds that Rewant Ruia, son of Essar Steel promoter Ravi Ruia, is a beneficiary of a trust that backed Aurora Enterprises, which held 25% in Numetal.
The second round of bids was called where JSW Steel joined Numetal to put in a bid of ₹ 37,000 crore, while Vedanta Ltd entered the fray as a third bidder. ArcelorMittal India, too, put in a bid.
Both Numetal and Essar Steel had challenged disqualification of the first round of bids in the Ahmedabad bench of the National Company Law Tribunal (NCLT), which did not give any relief to bidders, but asked the committee of creditors to take another look at bids before disqualifying them. The committee of creditors had sought a second round of bidding by 2 April. The NCLT order was challenged by both bidders in the NCLAT. After the NCLT order, ArcelorMittal India had offered to repay any outstanding loans owed by Uttam Galva Steels Ltd, where it held promoter stake, and KSS Petron. The steelmaker had placed ₹ 7,000 crore in an escrow account, with the condition that lenders disqualify Numetal’s bid.
Essar Steel has a debt of ₹ 49,000 crore and was referred to NCLT in June 2017. After the two firms were disqualified by the resolution professional under Section 29A of the Insolvency and Bankruptcy Code, which prohibits related parties of defaulting firms from participating in the resolution process, the two firms had filed appeals before the tribunal.