Essar Steel sale: ArcelorMittal to pay Uttam Galva dues

The world’s largest steelmaker ArcelorMittal on Thursday asserted that its bid for debt-laden Essar Steel is “eligible” and indicated that any pay off towards outstanding dues of Uttam Galva, a firm in which it was a minority shareholder till sometime back, would be a “goodwill gesture”. The Committee of Creditors (CoC) had met representatives of ArcelorMittal and Numetal which are in the race to acquire the stressed asset regarding their eligibility.

“Our fundamental position is that we are eligible and in reality were never the promoters of these companies. So any discussion about repayment of any dues would be a gesture of goodwill,” Brian Aranha, executive vice-president (strategy, technology, R&D) at ArcelorMittal, said here at the company’s R&D facility.

The lenders earlier had objected to ArcelorMittal’s investment in Uttam Galva on default of loan repayments to the tune of about Rs 8,000 crore.

ArcelorMittal had written off investment of $150 million in 2015. The company has further interest in the investment, Aranha said.

He said ArcelorMittal had initiated the declassification process as Uttam Galva’s promoter before submitting bid for Essar Steel but due to administrative delay, the declassification came after the bids submission.

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ArcelorMittal had sold back its stake in Uttam Galva to its promoters to clear its bid under the Insolvency & Bankruptcy Code (IBC) as clause 29A of the code prevents promoters of defaulting companies from bidding for stressed assets.

ArcelorMittal is the most eligible bidder for Essar Steel. It has no equal in the game, Aranha said.

ArcelorMittal strongly believes its bid is eligible and any repayment discussion on outstanding dues of Uttam Galva will be a “goodwill gesture, a source said.

The company if selected has plans to increase Essar Steel’s capacity to 20 MT from the present about 6 MT besides developing a research and development unit in Hazira, he said.

The minority shareholders of Uttam Galva had flagged concerns over declassification of ArcelorMittal as promoters of Uttam Galva.

ArcelorMittal, however, had rejected the allegations as “trivial attempts” designed to distract it from Essar Steel, claiming it is the most credible entity to takeover control of the debt-laden firm. 

By Namita Tewari, DNA Money