INDIA’S top court yesterday (12) stopped steel major ArcelorMittal from acquiring the debt-ridden Indian firm, Essar Steel.
Following the Supreme Court’s latest order, the LN Mittal owned steel company cannot make payments to banks to acquire the firm as planned.
The apex court also ordered status quo on the March 8 order of the country’s National Company Law Tribunal (NCLT) which accepted ArcelorMittal’s bid to purchase Essar Steel.
The NCLT also gave its approval to ArcelorMittal’s resolution plan for the acquisition.
However, the Committee of Creditors (CoC) of Essar Steel questioned higher payment to the Standard Chartered Bank (SCB), a financial creditor of the steel firm.
The top court also asked the NCLT to decide on appeals in the case.
As per the NCLT order, SCB was allotted only 1.7 per cent of its total admitted claims. However, the financial creditors were recovering their claims close to 92 per cent.
The distribution of money should be completed on a pro-rata basis and the SCB should get its share accordingly, the tribunal stated in its order.
The NCLT approved a joint offer from ArcelorMittal and Nippon Steel who were ready to pay £4.57 billion to the banks and then invest about another £838.33 million in Essar Steel.
The CoC objected, saying the distribution of cash among the banks was unfair, according to the resolution plan.
The purchase of Essar Steel would have allowed the steel giant to enter the Indian market with an annual steel production capacity of 10 million tonnes.