(Bloomberg)
(Bloomberg)

Essar Steel shareholder seeks rejection of ArcelorMittal bid

  • Essar Steel Asia Holdings Ltd (ESAHL) has filed an appeal before the NCLAT
  • ESAHL alleged that Mittal was a promoter of companies that had been classified as NPA by banks

NEW DEHI : Essar Steel Asia Holdings Ltd (ESAHL), a shareholder of Essar Steel Ltd, has alleged that ArcelorMittal chairman and chief executive officer, L.N. Mittal, has suppressed vital facts that would otherwise render him ineligible to offer a buyout plan for the distressed steel mill under Section 29A of the Insolvency and Bankruptcy Code (IBC). It also sought disqualification of ArcelorMittal’s bid for the debt-laden company.

At a hearing of the resolution plan for Essar Steel before the National Company Law Appellate Tribunal (NCLAT) on Tuesday, ESAHL, a Ruia family-controlled entity, alleged that until 31 December 2018, Mittal was a shareholder of Navoday Consultants, which in turn was a shareholder in certain companies run by his brothers Pramod and Vinod Mittal, which had defaulted on bank loans. Mittal’s association with these companies would make him ineligible as a bidder.

The companies are Gontermann Peipers India Ltd, GPI Textiles Ltd and Balasore Alloys Ltd, of which the first two were classified as non-performing assets by their lenders.

In the previous affidavits submitted on behalf of Mittal by Rajan Tandon, head of L.N. Mittal’s family office, and Sanjay Sharma, director of ArcelorMittal India, Mittal had said that since the family business was split in 1994, neither he nor his company ArcelorMittal had any shareholding in the Indian firms run by his brothers.

Significantly, Numetal, which was also in the fray to acquire Essar Steel, had brought up Mittal’s association with Gontermann Peipers India, GPI Textiles and Balasore Alloys, before the resolution professional last September. However, these claims were dismissed back then.

But now, ESAHL has alleged that Mittal was a co-promoter of Navoday Consultants Ltd as on 30 September 2018, along with his brothers Pramod Mittal and Vinod Mittal. It further added that Navoday was, in turn, a promoter of GPI Textiles, Balasore Alloys and Gontermann Peipers.

On Tuesday, ESAHL said in a statement that Mittal had sold his shareholding in Navoday between 1 October and 31 December 2018, while the Essar Steel resolution process was ongoing.

The court has asked ArcelorMittal to reply to the latest charges.

Last October, ArcelorMittal had paid 7,469 crore to settle outstanding dues of Uttam Galva and KSS Petron with the latter’s financial creditors to qualify as a bidder for Essar Steel, when the Supreme Court found Mittal to be a related party to the two defaulting companies.

Responding to the charges, an Arcelor Mittal spokesperson said: “This is the latest in a long line of frivolous attempts by the defaulting promoters of Essar Steel to distract from the central fact that Indian lenders have declared ArcelorMittal as the most credible owner of Essar Steel…ArcelorMittal has stated on numerous occasions that there is absolutely no business connection between Mr Lakshmi Mittal and his brothers. Allegations regarding ArcelorMittal’s ineligibility on account of companies associated with Mr Mittal’s brothers had already been raised by the promoters of Essar Steel before the Supreme Court, which refused to even entertain such assertions."

ArcelorMittal has offered upfront cash settlement of 42,000 crore to lenders of Essar Steel and infused another 8,000 crore capital into the plant at Hazira in Gujarat with an annual nameplate capacity of 10 million tonnes. However, the resolution, in this case, has run longer than two years due to attempts by the former promoters to stymie the process, as well as by operational creditors who are unhappy with the settlement offered to them.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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