Essar Steel shareholders offer to clear all dues - Report
Financial Express reported that Essar Steel shareholders have offered to pay an aggregate of INR 54,389 crore including INR 47,507 crore upfront cash payment to clear all dues owed to lenders, nearly 14 months after the company was admitted for the insolvency process. "The aforesaid plan includes an upfront cash payment of Rs 47,507 crore to all creditors, including Rs 45,559 crore to the senior secured financial creditors, i.e. 100 percent recovery. Commenting on the proposal, Prashant Ruia, director, Essar, said the value and quality of the asset can be ascertained from the interest shown and value offered by all the global steel majors. He said "We believe our current proposal will provide 100 percent recovery to secured creditors and lenders, and maximum recovery for unsecured creditors. This is well in excess of that offered in the proposal under consideration, and is in line with value maximisation, which is the underlying principle of the Insolvency and Bankruptcy Code (IBC) process.”
The offer made by Essar Steel shareholders is higher than ArcelorMittal’s total offer of INR 50,000 crore, but it will stand only if the debt-laden company exits the IBC proceedings as Section 29A bars wilful defaulters, defaulter promoters and related parties from acquiring other NPA accounts.
Within hours of Essar Steel shareholders offering to clear all dues of lenders for withdrawal of the insolvency process, ArcelorMittal said that the withdrawal from the IBC process is not possible as expressions of interest have already been issued. It said “Our understanding is that the IBC’s section 12A does not apply to the resolution process of Essar Steel. Section 12A clearly states that any application to withdraw must be submitted prior to issuance of the invitation for expressions of interest and must be accompanied by a bank guarantee for the specified amounts. Moreover, the application to withdraw from the IBC process must be accompanied by the bank guarantee. We expect the process to continue as per the clear terms of the IBC.”
ArcelorMittal was recently declared preferred bidder by lenders of Essar Steel after it committed to paying back outstanding dues of Uttam Galva Steel and KSS Petron. On October 4, the Supreme Court, while declaring bids submitted by both ArcelorMittal and VTB-backed Numetal ineligible under section 29A, gave another chance to them up on clearing dues.
Source : Financial Express