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ArcelorMittal paid Rs 39,500 crore for Essar Steel: Committee of creditors

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16th May, 2019 19:40 IST
Standard Chartered holds a corporate guarantee by Essar Steel for a Rs 3,487 crore loan to Essar Steel Offshore. The case will next be heard on May 20. The committee of creditors of Essar Steel has clarified to an appellate tribunal that ArcelorMittal’s bid for Essar Steel was for Rs 39,500 crore and a minimum of Rs 2,500 crore for profits of the debt laden steelmaker during insolvency proceedings.

This backs the claim put forth by Standard Chartered, one of the financial creditors, before the National Company Law Appellate Tribunal (NCLAT) that the Rs 39,500 crore bid by ArcelorMittal was below the Rs 42,000 crore offer the latter made in front of the Supreme Court.

"In the final judgment the Supreme Court referred only to … ( a bid) of Rs 35,000 crore. Ultimately it was raised to Rs 39,500 crore but there was also an element of working capital available with the company. It could be minus or plus. If the profits that the lenders are entitled to were minus then we would get a guaranteed Rs 2,500 crore.” said Gopal Subramaniam, counsel for the committee of creditors.

He said if the profits during the insolvency proceedings exceeded 2,500 crore, Arcelor Mittal would pay the lenders the difference.

Subramaniam also defended the distribution of funds in the resolution plan approved by the CoC which includes a payout of Rs 60.7 crore or only 1.7% of their claims as against 89% recover for other lenders.

“It is only because it is money which has been transferred out of India to a Mauritian Entity for an American step-down subsidiary. It did not lead to any project asset of the corporate debtor.” Said Subramaniam to the bench after the two-judge bench led by justice SJ Mukhopadhaya questioned the ability of the CoC to make changes to a plan submitted by a resolution applicant.

Standard Chartered holds a corporate guarantee by Essar Steel for a Rs 3,487 crore loan to Essar Steel Offshore. The case will next be heard on May 20.
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