Steel giant, ArcelorMittal has said that it has decided to pay the sum of Rs 74.69 billion (£ 780.20 million)to the lenders of Uttam Galva and KSS Petron to clear the debt of two firms’ in line with India’s Apex Court judgment dated October 4.
The company’s statement came 24 hours earlier the two-week deadline given to the two firms, ArcelorMittal and Numetal to clear their overdue debts associated with the affiliated firms expires.
India’s top court, Supreme Court, in its judgment, in order to become qualified to bid for Essar Steel under India’s section 29(A) of the insolvency code, the two companies need to repay the loans associated with their affiliated companies.
“ArcelorMittal announces that, in-line with the Indian Supreme Court ruling dated October 4, 2018, it has approved a payment of Rs 7,469 crore ($1 billion) to the financial creditors of Uttam Galva and KSS Petron to clear overdue debts in order that the offer it submitted for Essar Steel India Limited (‘ESIL’) on April 02, 2018 is eligible and can be considered by ESIL’s Committee of Creditors (‘CoC’),” the company said in a statement on Wednesday (17).
ArcelorMittal had purchased 29.05 per cent of Uttam Galva’s stake in 2009 and has since been classified as a promoter. However, it decided to sell its stake to other companies in February in 2018 to become eligible to bid for debt-ridden Essar Steel.
Meanwhile, Fraseli, Lakshmi Mittal’s Luxembourg-based trust held 32.22 per cent share in KSS Global which in turn held 100 per cent stake capital in KSS Petron. Mittal had sold this share too before the bidding process.
However, India’s top court had noted that since the share in both firms was sold three days before the submission of the resolution plan, it was done with the “sole object of avoiding the consequence mentioned in the provision to section 29A(c)” which prohibits the promoters of defaulting firms to bid for properties under Indian law.