Agencies
Kolkata :ArcelorMittal on Friday announced that the Committee of Creditors (CoC) to Essar Steel India Limited (ESIL) has voted in favour of the company’s acquisition.
ESIL’s resolution professional (RP), on behalf of the CoC, has issued the company with a Letter of Intent (LOI) stating that the company has been identified as the successful applicant.
The resolution plan, as disclosed by Arcelor, includes an upfront payment of Rs 420 billion towards ESIL’s resolution debt, with a further Rs 80 billion capital injection into ESIL to support operational improvement, increase production levels and deliver enhanced levels of profitability.
Arcelor plans to increase ESIL’s finished steel shipments to 8.5 million tonnes over the medium-term. The long-term aspiration was to increase shipments to 12 and 15 million tonnes through the addition of new iron and steelmaking assets.
ESIL’s current level of annualised crude steel production is 6.5 million tonnes. ESIL also has iron ore pellet facilities in the east of India with a current annual capacity of 14 million tonnes per annum.
Arcelor will jointly own and operate ESIL in partnership with Nippon Steel & Sumitomo Metal Corporation (NSSMC). Arcelor and NSSMC expect to finance the joint venture through a combination of partnership equity (one-third) and debt (two-third) and Arcelor anticipates that its investment in the joint venture will be equity accounted.
Nippon believes that, by bringing together the strengths of both companies, NSSMC and AM (ArcelorMittal) will be able to turn around ESIL to be a competitive steel manufacturer and contribute to further development of Indian steel industry and Indian economy, the company said.
Voting on the ArcelorMittal plan which concluded on Thursday secured more than 92 per cent of the CoC’s voting share.
A lender said that the letter of intent was issued in favour of Arcelor Thursday night and the company had accepted it. The resolution plan is expected to be filed with the NCLT shortly.
In a surprise move, however, the Ruias of Essar Steel made an offer to the CoC after the conclusion of the voting, to settle the entire claims of Rs 543 billion under Section 12A of the IBC. It allows a company to exit the bankruptcy process if it offers to repay the dues and 90 per cent of the lenders accept the proposal.
“The courts will take a view on the offer,” the lender said. The legal battle in the Essar case is likely to continue.
(Except for the headline, this story has not been edited by The Kashmir Monitor staff and is published from a syndicated feed.)
