India appeals court refuses to stop Essar Steel sale to Arcelor
March 19 2019 12:28 AM
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ArcelorMittal metals plant in Kryvyi Rih, Ukraine.
A worker climbs a staircase as hot steel bars pass along the continuous casting production line at the ArcelorMittal metals plant in Kryvyi Rih, Ukraine. A bankruptcy court refused to halt the sale of Essar Steel India to ArcelorMittal, clearing another hurdle for billionaire Lakshmi Mittal as he prepares to enter India after a yearlong struggle.

Bloomberg/New Delhi

A bankruptcy court refused to halt the sale of Essar Steel India Ltd to ArcelorMittal, clearing another hurdle for billionaire Lakshmi Mittal as he prepares to enter India after a yearlong struggle.
A two-judge bench of the National Company Law Appellate Tribunal allowed ArcelorMittal to proceed with payment for the purchase, while agreeing to further hear appeals by Standard Chartered Plc on the distribution of funds to lenders. Standard Chartered and an Essar group company had challenged a lower court’s approval of the resolution plan submitted by Arcelor and partner Nippon Steel & Sumitomo Metal Corp.
The Ruia family lost control of Essar Steel after it was forced into bankruptcy proceedings and put on the block. The founders launched multiple efforts to reclaim the asset, including a last-minute offer to trump the world’s largest steelmaker’s bid by paying creditors Rs543.9bn ($7.9bn). Standard Chartered is challenging the process as a substantial part of its dues would remain unpaid under Arcelor’s plan, people familiar with the matter have said.
The appeals court in its ruling on Monday said it will hear the case for the distribution of ArcelorMittal funds to lenders on March 27 and has asked the Insolvency and Bankruptcy Board for data on the average recoveries in insolvency cases for financial and operational creditors. The founders can challenge the final decision of the appeals court in India’s top court.
Arcelor and Nippon have offered to pay Rs420bn as an upfront cash payment to creditors and infuse a further Rs80bn into the mill, the largest steel asset on the block under the bankruptcy law.
The bankruptcy court that approved the plan has suggested that financial creditors forgo 15% of the upfront money to pay operational creditors, which include units supplying goods and services to the mill.
The purchase would immediately make Arcelor the fourth-biggest player in a nation where the administration plans to invest trillions of rupees in infrastructure. Shares of the Amsterdam-listed company extended gains to as much as 2.6% after the court’s decision.



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