Ruias move NCLAT against ArcelorMittal bid

Last Updated: Wed, May 08, 2019 11:56 hrs
A logo is seen on the roof of the ArcelorMittal steelworks headquarters in Ostrava

New Delhi: Prashant Ruia-led Essar Steel Asia Holdings (ESAHL), the majority shareholder in Essar Steel, on Tuesday moved the National Company Law Appellate Tribunal (NCLAT) seeking rejection of ArcelorMittal's bid to buy out the company.

"Lakshmi Mittal and ArcelorMittal India Ltd (AM) had conspired to suppress vital facts and misled the Committee of Creditors (CoC), the Supreme Court and the appellate tribunal into believing that Lakshmi Mittal and ArcelorMittal had ceased to have any business association with his brothers Pramod Mittal and Vinod Mittal and their companies," ESAHL said in a statement.

In its application, ESAHL cited a sworn affidavit filed by ArcelorMittal on October 17, 2018 which said that there had been no business association between Lakshmi Mittal and his brothers and their companies for more than 20 years and Lakshmi Mittal or Arcelor has no shareholding in any of the companies where his brothers are promoters, including GPI Textiles, Balasore Alloys and Gontermann Piepers.

ESAHL, which holds 72 per cent stake in Essar Steel, presented documents which show that as late as September 30, 2018, Lakshmi Mittal was a co-promoter of one Navoday Consultants along with his brothers Pramod and Vinod Mittal, and Navoday was in turn a promoter of GPI Textiles, Balasore Alloys and Gontermann Piepers.

ESAHL said: "These facts make it clear that ArcelorMittal has suppressed and concealed from the CoC and all courts that its promoter Lakshmi Mittal continued to have business relations with his brothers Pramod Mittal and Vinod Mittal, and accordingly AM was ineligible to submit a resolution plan under Section 29A of the IBC."

The statement noted that Gontermann Peipers and GPI Textiles are classified as NPA and due to association of Lakshmi Mittal with these companies and AM would be a related party of these companies, thus making it ineligible under the provisions of the Insolvency and Bakruptcy Code (IBC).

ESAHL had offered Rs 54,389 crore to the lenders of the company. This proposal was rejected by the CoC.

ArcelorMittal, however, dismissed the claims in the statement as frivolous.

"This is the latest in a long line of frivolous attempts by the defaulting promoters of Essar Steel to distract from the central fact that Indian lenders have declared ArcelorMittal as the most credible owner of Essar Steel."

It said that following the Supreme Court judgement of October 2018, ArcelorMittal paid Rs 7,500 crore to the lenders of Uttam Galva and KSS Petron to become eligible to bid for Essar Steel.

"In contrast, the promoters of Essar Steel, who are responsible for leading the company into insolvency, have failed to repay any amount to lenders and reverse their ineligibility as required by the Supreme Court," ArcelorMittal's statement said.

The latest allegations of the Essar Steel promoters are "yet another attempt to subvert the directions of the Supreme Court and the IBC". The assertions of ESAHL are "irrelevant, misleading and will be rebutted in the strongest possible terms", it said.

The Delhi-based appellate tribunal had approved ArcelorMittal's bid of Rs 42,000 crore on March 18, dismissing the Essar promoters Ruias' plea against the approval of the NCLT's Ahmedabad bench to the bid.

The long-drawn resolution process hit another roadblock with the Supreme Court last month stopping ArcelorMittal from making payment to lenders to buy the insolvent steel entity, thereby stretching billionaire Lakshmi Mittal's wait to have a foothold in his home country.