Essar Steel Promoter Moves Tribunal Against ArcelorMittal Bid

Essar Steel's majority shareholder Essar Steel Asia Holdings (ESAHL) on Tuesday moved the National Company Law Appellate Tribunal (NCLAT) seeking the 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, 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," Essar Steel said in a statement.

The Prashant Ruia-led ESAHL, in its application, 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 that Lakshmi Mittal or ArcelorMittal 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 committee of creditors (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 non-performing assets (NPAs or bad loans) and owing to the association of Lakshmi Mittal with these companies, ArcelorMittal would be a related party of these companies, making it ineligible to bid under the provisions of the Insolvency and Bankruptcy Code (IBC).

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

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

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, stretching, thereby, the billionaire Lakshmi Mittal's wait to have a foothold in his home country.