ArcelorMittal has been declassified as a promoter of Uttam Galva Steels from the stock exchanges, a technical procedure that made it ineligible as a bidder for Essar Steel.
The letter of approval for declassification as a promoter of Uttam Galva Steels from the National Stock Exchange (NSE) and the BSE came on Friday.
ArcelorMittal Netherlands BV had on February 7, ahead of the Essar Steel bid, transferred its 29 per cent stake in Uttam Galva Steels, which had accumulated non-performing assets (NPAs) for over a year, to Sainath Trading Company by way of an inter-se transfer at Rs 1 a share but the change in promoters had not reflected in the records of the stock exchanges.
On Wednesday, the committee of creditors for Essar Steel rejected ArcelorMittal’s bid on grounds of eligibility under Section 29A of the Insolvency and Bankruptcy Code (IBC) for being a promoter of an NPA for more than a year even though it did not have board representation or management control of it.
“Declassification of ArcelorMittal Netherlands BV as part of promoter group of Uttam Galva was a matter of procedure and applying to the stock exchanges,” said Sumit Agrawal, former Securities and Exchange Board of India (Sebi) official assisting ArcelorMittal in seeking approvals. ArcelorMittal declined to comment.
ArcelorMittal had approached the stock exchanges in the first week of March for declassification. The declassification comes ahead of the Essar Steel rebid expected in the first week of April. On Thursday, ArcelorMittal released a statement confirming its intention to participate in the rebid.
Ahead of the Essar Steel bid in February, L N Mittal had also sold his personal holding in KazStroyServices (KSS) of Kazakhstan, an oil infrastructure provider company. KSS, in turn, held a 100 per cent stake in KSS Petron, which is undergoing insolvency proceedings.
The Essar Steel rebid would give Numetal and ArcelorMittal time to deal with its technical glitches. Both the bids were rejected by the committee of creditors on eligibility grounds.
Numetal’s bid was rejected because 25 per cent of its shares were owned by an offshore trust, with Rewant Ruia as a beneficiary. The Ruias are the promoters of Essar Steel, which defaulted on bank loans, leading to insolvency proceedings.
Ahead of the Committee of Creditors (CoC) meeting on Wednesday, Numetal had filed an application before the Ahmedabad Bench of the National Company Law Tribunal (NCLT), seeking a declaration that the company was eligible to submit a resolution plan for Essar.
The NCLT had fixed April 4 as the next date of hearing, but on a plea for speedy hearing, the date has been brought forward to March 27. The NCLT had observed that any decision taken or resolution passed by the CoC in the meeting on March 21 would be subject to the outcome of the application by Numetal.
The outcome of the NCLT’s decision on eligibility will have a bearing on Numetal’s rebid for Essar Steel and the entire process.
Both ArcelorMittal and Numetal are in a pitched battle for Essar Steel, which is among the 12 Reserve Bank of India (RBI)-mandated cases for insolvency. Essar Steel has a nameplate capacity of 9.7 million tonnes and would give the acquirer a foothold in the growing Indian steel market.
Apart from ArcelorMittal and Numetal, those who had submitted expressions of interest for Essar Steel can participate in the rebid.
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