New Delhi: After years of trying to get a foothold in India through a greenfield project and almost getting it via a brownfield acquisition, the world's largest steelmaker ArcelorMittal on Tuesday castigated corporate rivals for trying to sabotage its takeover bid of Essar Steel under the new bankruptcy rule.
"It appears there are certain parties in India who would like that the Insolvency and Bankruptcy Code (IBC) not be implemented according to the law.
"The IBC was introduced for a very serious reason - to address a major problem with bad loans. If the law is not implemented correctly and the rules are flouted, as suggested by some, this sends a negative signal about the certainty of India as an investment destination," ArcelorMittal India tweeted.
The outburst of the company headed by NRI Lakshmi Niwas Mittal, is significant as it follows the decision by India's largest lender State Bank of India (SBI) to put on sale its entire loan exposure of Rs 15,431 crore in bankrupt Essar Steel, which is undergoing resolution proceedings since August 2017, much beyond the mandatory 270 days allowed under the IBC.
In October 2018, the Committee of Creditors (CoC) to Essar Steel, led by SBI, had approved ArcelorMittal's proposal of Rs 42,000 crore to the lenders and an additional Rs 8,000 crore towards capital expenditure in Essar Steel.
However, a group of creditors including the promoters of Essar Steel have challenged the decision of the CoC. Last week, the CoC filed an application at NCLAT requesting for a speedier disposal of the case within the next three weeks.
The company, in its tweeted statement, said that the opportunity to make an offer for the assets in the IBC process has been very transparent and no company or individual can say they were not aware of the process and therefore should not expect to come in at a late stage, providing no details as to the financing of their offer after a decision has been taken by the CoC.
Soon after the CoC of the debt laden firm had declared ArcelorMittal as the highest bidder in the auction for the steel company, promoters of Essar Steel came up with its offer to repay Rs 54,389 crore seeking withdrawal from insolvency proceedings.
The plan included an upfront cash payment of Rs 47,507 crore to all creditors, including Rs 45,559 crore to the senior secured financial creditors, i.e. 100 per cent recovery.
"In the case of Essar Steel, opportunities have been provided to bidders for nearly a year to first be eligible and second, to make a compelling offer.
"ArcelorMittal has followed the process from the start. We fully expect the process to continue to be implemented correctly and as per the law and that statements attempting to convince otherwise not be given any credibility," it concluded.