Global steel giant, ArcelorMittal announced that it has completed the acquisition of Essar Steel on December 16. According to the release the company has established a joint venture with Nippon Steel called ArcelorMittal Nippon Steel India (AM/NS), which will own and operate Essar Steel.
ArcelorMittal holds 60 percent AM/NS with India and Nippon Steel holding the balance.
Aditya Mittal, President, and CFO of ArcelorMittal have been appointed Chairman of AM/NS India, and Dilip Oommen, a long-time veteran of Essar has been appointed AM/NS India’s CEO.
Essar Steel which owes around Rs 49,046 crore to the financial creditors was among the first list of 12 largest stressed accounts that the Reserve Bank of India had drawn up in June 2017.RBI had asked banks to refer to the NCLT and the company was formally sent to the tribunal on June 27, 2017.
As per the resolution plan in October 2018, financial creditors would recover 92 percent or around Rs 42,000 crore of their total exposure of Rs 49,046 crore.
Following this, Essar Steel Asia Holding made a counter-offer to pay the entire amount of Rs 54,389 in cash to bankers but was rejected by the NCLT in January 2019.
However, on March 8, the NCLT approved ArcelorMittal’s Rs 42000 crore bid.
On November 15, the Supreme Court had set aside the NCLAT order and gave equal rights to both secured and unsecured creditors of Essar Steel and paved the way for its takeover by ArcelorMittal for Rs 42,000 crore.
According to the sources, ArcelorMittal did not immediately release it to the lenders after the SC’s November 15 order and had kept the entire Rs 42,000 crore to be repaid in an escrow account.
As per the plans approved by the committee of creditors (CoC), upheld by the SC ruling, SBI will receive the major chunk of about Rs 12,161 crore, while Canara Bank and ICICI bank will get Rs 3,493 crore and Rs 2,110 crore respectively.
The operational creditors are going to get Rs 196 crore proposed by ArcelorMittal, plus another Rs 1,000 crore later allowed by the creditors’ committee, taking the total repayment amount to Rs 1,196 crore.
ArcelorMittal had initiated payment for the acquisition of debt-ridden Essar Steel for Rs 42,000 crore on December 13, thereby making it the single-biggest recovery under the Insolvency and Bankruptcy Code (IBC).
