INDIAN steel tycoon LN Mittal-owned ArcelorMittal has initiated payment to acquire debt-ridden Indian steel mill Essar Steel for Rs 420 billion or around £4.46bn, media reports said on Friday (13).
India’s top court had cleared the way for the steel company to acquire Essar Steel in November.
With the latest move, the steel giant will finally enter into the Indian market after months of efforts to acquire Essar Steel after paying the promised sum to Indian lenders led by the State Bank of India (SBI).
Media reports that have cited banking sources said: "Payment from ArcelorMittal has started flowing and the entire payment is expected to be cleared in a day or two."
The Luxembourg head-quartered company has arranged the entire fund and is likely to transfer the sum by Monday (16).
"ArcelorMittal has arranged the entire amount of Rs 420bn, which is likely to be transferred to the State Bank of India, the lead banker that took control of Essar Steel under the Insolvency and Bankruptcy Code (IBC)," one of the sources said.
After the payment to the lenders, this will be the single-largest recovery under the country’s IBC.
While ArcelorMittal had kept the entire Rs 420bn to be repaid in an escrow account, it did not immediately release it to the lenders, according to the previous top court order.
The Supreme Court upheld the plan approved by the committee of creditors (CoC) last month and accordingly lenders will get their sum from the steel giant.
Thus, India’s largest lender SBI will get a sum of Rs 121.61bn, followed by Canara Bank with Rs 34.93bn, and ICICI Bank with Rs 21.10bn, the sources said.
The company is expected to complete the acquisition process by the end of 2019 after the top court ruled in its favour.
The company had said in a statement: “ArcelorMittal India Private Ltd's (AMIPL) resolution plan for Essar Steel India Ltd (ESIL) has been unconditionally approved by the Supreme Court, and the approval of AMIPL's resolution plan is the final procedural step in ESIL's corporate insolvency process.”
"The completion of the transaction is now expected before the end of the year. After completion, ArcelorMittal will jointly own and operate ESIL in partnership with Nippon Steel Corporation, Japan's largest steel producer and the third largest steel producer in the world, in line with the joint venture formation agreement signed by the two companies.”
