Essar Steel Promoters Oppose ArcelorMittal, Once Again

Essar Steel Asia Holdings Ltd., a promoter of Essar Steel Ltd., has approached the National Company Law Appellate Tribunal opposing a bid by ArcelorMittal to purchase the beleaguered steelmaker.

ArcelorMittal and its promoter Lakshmi Mittal “conspired to suppress vital facts” and mislead the committee of creditors for Essar Steel, Essar Steel Asia said in a statement. Mittal has had business dealings with his brothers Pramod and Vinod Mittal even as of September 2018, something that he hid from the committee of creditors, the statement said. In a complaint to the appellate tribunal, Essar Steel promoters cited a sworn statement by ArcelorMittal that said Mittal has not had business dealings with his brothers for the last 20 years.

Mittal was the co-promoter of GPI Textiles, through his holding in Navodaya Consultants Ltd., according to Essar Steel Asia. Mittal is also the co-promoter of Gontermann Peipers, Essar Steel Asia claimed. Both GPI Textiles and Gontermann Peipers are non-performing assets, the statement said.

Owing to this ownership, ArcelorMittal is non-compliant as per Section 29A of the Insolvency and Bankruptcy Code, which bars promoters of defaulting firms from participating in the bidding process, the statement said.

This isn't the first time that the promoters have tried to intervene in the insolvency proceedings. Last year, Numetal, an entity where the Ruia family had a stake, was one of the bidders for Essar Steel. The lenders rejected Numetal's proposal under Section 29A and ArcelorMittal's offer to pay lenders Rs 42,000 crore was selected as the winning bid.

Later, Essar Steel Asia had offered Rs 54,389 crore to the lenders of the company in October last year on the condition that the lenders withdraw the insolvency proceedings against Essar Steel, under Section 12A of the IBC and reject the bid submitted by ArcelorMittal. This proposal, too, was rejected by the committee of creditors.

In March, Prashant Ruia and two other directors of Essar Steel had filed a petition at the Ahmedabad bench of the National Company Law Tribunal, where they had opposed the way in which ArcelorMittal's bid was selected by the committee of creditors. However, that petition was rejected by the NCLT, which upheld its decision to allow ArcelorMittal to take over Essar Steel.

Essar Steel owes over Rs 49,000 crore to its financial creditors and operational creditors have claims worth over Rs 4,800 crore admitted under IBC.