ArcelorMittal is likely to bid for Uttam Galva Steels, who was recently admitted to the National Company Law Court (NCLT) and whose co-promoter was once.
The NCLT Mumbai Bench bank on October 1 admitted a petition filed by the State Bank of India (SBI) under the Insolvency and Bankruptcy Code (IBC).
People familiar with it said ArcelorMittal would bid for the company. However, the company declined to comment.
Going through the NCLT route will crystallize Uttam Galva’s debt for ArcelorMittal, sources added.
“There would be no hidden liabilities,” said one of them.
The world’s largest steel mill had taken over most of Uttam Galva’s debt to be deemed eligible for Essar Steel’s offer under insolvency law and became a major financial creditor.
The auditors’ report, at the end of the Uttam Galva results finalized on March 31, said that ArcelorMittal Luxembourg and ArcelorMittal India paid $ 169.04 million and Rs 4,922 million, respectively, to secured financial lenders to settle loans in foreign currency, overdue rupee term loans and working capital. loans, together with interest, acting as a lender providing financial support to Uttam Galva.
However, Uttam Galva defaulted on its debt. According to the company’s annual report for 2019-20, he defaulted on the principal of Rs 616.05 crore and interest of Rs 81.63 crore.
The annual report also mentioned that the company’s account became a non-performing asset (NPA) with the lenders, on March 12 SBI filed a petition under the IBC with the NCLT Bank of Mumbai to initiate the insolvency resolution process. corporate (CIRP).
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This was not the first time that SBI submitted a petition to start the CIRP in Uttam Galva. The company became part of the Reserve Bank of India’s second NPA list.
In November 2018, SBI withdrew its request after ArcelorMittal paid Rs 7,469 million on account of Uttam Galva Steels and KSS Petron to settle their debts and be considered for the Essar Steel bid (most of it was due to Uttam Galva) .
After taking on the debt, in 2018, ArcelorMittal had said it was considering whether and how to acquire the Uttam Galva property. It was a good quality asset and a strong synergy with Essar Steel, he had said then.
Uttam Galva has a cold rolling capacity of 1.2 million tonnes per year.
Insolvency law does not allow delinquent developers to bid for assets; Both Uttam Galva and KSS Petron had been classified as NPAs for over a year, making ArcelorMittal ineligible to bid for Essar Steel under the IBC.
ArcelorMittal was a co-promoter of Uttam Galva. In 2009, it signed a co-promotion agreement with the Miglani family and bought a 32 percent stake in Uttam Galva, paving its way into India.
However, in an attempt to be eligible for Essar Steel, Arcelor transferred its shares to a Miglani group company at Rs 1 per share in an inter-se transfer, prior to submitting the offer.
But the Supreme Court declared him ineligible and exercised its extraordinary powers to give bidders time to make overdue payments.
ArcelorMittal paid and became the winner of Essar Steel.
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