Mumbai: How much does ArcelorMittal need to pony up to be eligible to bid for Essar Steel?
The company is admitting to a much lower liability than previously known, in a recent letter from the Luxembourg-based steel maker to the lenders of Essar Steel.
Until now, it was widely believed that ArcelorMittal had to pay at least ₹ 7,000 crore to various lenders of Uttam Galva Steels Ltd and KSS Petron to qualify as a bidder for Essar Steel.
In May, ArcelorMittal was understood to have transferred ₹ 7,000 crore to an overseas escrow account of State Bank of India to show its commitment towards settling the unpaid dues of Uttam Galva Steels and KSS Petron, in which L.N. Mittal held an equity stake and was, hence, a connected person. On 10 September, Mint reported ArcelorMittal had, in fact, said it would pay the ₹ 7,000 crore to lenders along with increasing its bid for Essar Steel to ₹ 42,000 crore, following a National Company Law Appellate Tribunal (NCLAT) order to that effect.
Now, in a letter dated 11 October from ArcelorMittal to the committee of creditors of Essar Steel, seen by Mint, ArcelorMittal has totalled its obligations on these two accounts to ₹ 4,554 crore, far below the ₹ 7,000 crore figure.
ArcelorMittal has said Uttam Galva owes ₹ 829 crore in external commercial borrowings, ₹ 968 crore in rupee term loans and ₹ 2,189 crore in working capital loans, according to the letter. The total outstanding is ₹ 3,987 crore, according to ArcelorMittal’s calculations.
However, Uttam Galva was declared a non-performing asset in September 2016 when it defaulted on loans adding up to more than ₹ 5,654 crore.
According to the same letter, ArcelorMittal said KSS Petron owes ₹ 567 crore to its bankers. On the contrary, KSS Petron India’s website has published a list of creditors which admits the company owes more than ₹ 904 crore to financial creditors alone.
All figures include principal and interest up to 7 February for Uttam Galva and 9 February for KSS Petron, the 11 October letter said.
A spokesperson for ArcelorMittal declined to comment on the discrepancy between these known figures and ArcelorMittal’s calculations. Several bankers that Mint reached out to declined comment as well.
The letter further said that ArcelorMittal would “proceed forward with an assignment of such overdue loans to AMIPL (ArcelorMittal India Pvt. Ltd) or entities designated by it. We will separately work with you to progress execution of the necessary documents".
As a result of several litigations and a general lack of clarity on who owes whom how much, the case to offload Essar Steel, which has accumulated debt of ₹ 49,000 crore, is now tied in legal knots that are proving increasingly difficult to untie. On 8 October, Mint reported that industry experts were unsure of whether Numetal Mauritius, the other contender for bankrupt Essar Steel, had to pay up ₹ 49,000 crore or ₹ 80,000 crore to be eligible to bid for the stranded asset.
The Supreme Court’s deadline for these two players to pay up is 18 October.