The Miglani family, co-promoters of Uttam Galva Steel, is looking at buying the distressed Global Steel Philippines, owned by Pramod Mittal, brother of L N Mittal, chairman of ArcelorMittal.
When contacted, Ankit Miglani, deputy managing director of Uttam Galva, confirmed the family was looking at the asset. “Uttam Galva is not looking at buying the company as there is no synergy between the two entities. It is the Miglani family that is looking at the asset. The due diligence is currently underway and it is premature to talk more about the deal at this point," he said.
IDBI is advising the Miglani family on the deal. Miglani said Global Steel Philippines has been on sale for a long time. Sources familiar with the development said Miglani visited Manila recently for negotiations.
In an emailed reply, Pankaj Agarwal, joint company secretary, Global Steel Holdings Ltd, said, "We can not disclose the desired information as arbitration proceeding relating to Global Steel Philippines (GSPI) is pending in Singapore between GSPI, GSHL and the office liquidator in Philippines and creditors of banks. Moreover, our company is a privately held company and therefore, it can not be disclosed in the public domain to protect the interest of the company... The matter as sub-judice, our actual position shall be appreciated in right and legal perspective."
Global Steel Philippines imports steel slabs and converts them into hot-rolled and cold-rolled flat steel. The company has an installed capacity of 1.5 million tonne per year. National Steel Corporation, as the company was known before Pramod Mittal bought it from the government, was under liquidation from 1999-2004. It was then acquired by Global Steel Holdings Ltd, promoted by Mittal. The company was then renamed Global Steelworks Infrastructure Inc. In 2005, it was rechristened as Global Steel Philippines. The company has not been making any steel since 2010 and the Board of Investments, a government of Philippines arms, has been actively looking at liquidating the company.
Bought in 2004, Global Steel could not break even till 2008 when the world was hit by the economic slowdown. The company suffered losses and could not recover. In 2010, the Philippines government withdrew the seven per cent import duty on steel.
As part of the purchase agreement, the government was supposed to protect Global Steel from imports by way of tariffs and duties. This protection was withdrawn in 2010 as the company reported losses.