The dues pertain to debts of Uttam Galva Steels and KSS Petron, in which the steelmaker had invested
ArcelorMittal possibly faces a dues bill of over Rs 7,000 crore, to clear the eligibility hurdle in its bid for Essar Steel.
The Ahmedabad bench of National Company Law Tribunal in its order last week observed that promoters of defaulting companies will have to clear outstanding loans to submit resolution plans.
The bench’s order was in connection with pleas by ArcelorMittal and Numetal asking the authority to reconsider their bids for Essar Steel. The bids had been termed ineligible by the resolution professional overseeing the auction.
ArcelorMittal’s bid was turned down because of its investments in Uttam Galva Steels and KSS Petron Private Limited. Both the companies had defaulted on loan repayments.
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According to industry sources, while Uttam Galva Steels owes Rs 5,654 crore to its lenders, KSS Petron has debts of about Rs 1,400 crore.
Responding to queries from Moneycontrol, ArcelorMittal’s spokesperson said: "We are currently reviewing the order and will comment further in due course as appropriate.”
Sources close to the world’s largest steelmaker pointed out that "the court's observations around ineligibility would apply to Numetal too.”
"If Rewant Ruia is part of Numetal's bid, then wouldn't they need to pay up to participate,” an executive said.
Rewant Ruia, son of Essar Steel co-founder Ravi Ruia, is a minority shareholder in Numetal. Essar Steel has debts of about Rs 45,000 crore.
The order
The Tribunal had asked the resolution professional (RP) and Committee of Creditors (CoC) to reconsider the first round bids for Essar Steel. The order made the second round bids invalid.
At the same time, the bench had reprimanded the RP and CoC for not giving bidders time to rework their proposals.
It observed:
“The person shall be eligible to submit a resolution plan if such person makes payment of all overdue amounts with interest thereon and charges relating to non-performing asset accounts before submission of resolution plan.”
It also said: “… the resolution applicant shall be allowed by the Committee of Creditors such period not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause… The said opportunity to pay the overdue amounts to the lenders is not provided to the applicant (AMIPL).”
AMIPL is ArcelorMittal India Private Ltd, the local unit of the steel maker.
Interestingly though, the court chose not to comment on the eligibility of the bids. It has instead put the ball in the courts of the RP and CoC.