NCLT approves resolution plan by Arcelor affiliate for Uttam Galva

Resolution amount was Rs 4,020 cr as per the plan

The Mumbai bench of the National Company Law Tribunal (NCLT) on Friday approved the resolution plan submitted by AM Mining India Private Limited, an affiliate of ArcelorMittal, for Uttam Galva Steels.

The NCLT order was pronounced on October 14, 2022, approving the resolution plan submitted by the company with respect to the corporate insolvency resolution process.

The total resolution amount including payout to financial creditors, operational creditors and equity infusion as per the AM Mining’s plan was Rs 4,020 crore.The payout to financial creditors is Rs 3,472 crore.
 

Of the admitted claims by financial creditors, the claims of ArcelorMittal India Private Limited stood at about Rs 6,476 crore and AMNS Luxembourg Holding at Rs 1,445 crore.

The banks having exposure include Punjab National Bank (PNB), State Bank of India (SBI), ICICI Bank, Bank of Baroda, and Canara Bank.

It may be mentioned that ArcelorMittal had taken bulk of Uttam Galva’s debt in 2018 to become eligible for the Essar Steel bid, which was being auctioned under the Insolvency and Bankruptcy Code (IBC).

Uttam Galva, a company once co-promoted by ArcelorMittal, had been classified a non-performing asset (NPA) for more than a year. Section 29A under the Code prevented a promoter of a defaulting firm from bidding for assets.

Even though ArcelorMittal sold its stake in Uttam Galva to promoters at Rs 1 per share ahead of the Essar bid, the Supreme Court found it ineligible and exercised its extraordinary power under Article 142 of the Constitution in granting time to make payment of dues for defaulting companies. Arcelor paid and took on most of Uttam’s debt.

The company, though, defaulted on balance debt and in October 2020, the Mumbai bench of the NCLT admitted a petition filed by SBI under IBC.

Though several top steel producers had evinced interest in Uttam Galva, AM Mining was the sole bidder, and in June 2021, the committee of creditors approved its resolution plan.

With the NCLT nod to AM Mining’s resolution plan, ArcelorMittal’s association with Uttam Galva has come a full circle. In 2009, ArcelorMittal got a toehold in the Indian market through a 32 per cent stake in the company after facing inordinate delays with its greenfield projects.

But the IBC handed the world’s second-largest steelmaker an opportunity to have a more meaningful hold in the domestic steel market. In December 2019, ArcelorMittal and Nippon Steel jointly acquired Essar Steel (now ArcelorMittal Nippon Steel India – AM/NS India) having a steelmaking capacity of 9 million tonne per annum (MTPA).