Arcelor paying Rs 39500 cr for Essar Steel not Rs 42000 cr

first_imgNew Delhi: The world’s largest steel maker ArcelorMittal is in effect paying Rs 39,500 crore and not Rs 42,000 crore for buying Essar Steel as the remaining sum is being adjusted towards outstanding of an associate business, senior counsel Kapil Sibal Monday alleged in the NCLAT. Appearing on behalf of Standard Chartered, which is seeking to be treated at par with the secured financial creditor for its claim of Rs 3,500 crore, Sibal said bankers have clubbed Orissa Slurry Pipeline Ltd with Essar Steel in the auction to recover unpaid loans. Also Read – Commercial vehicle sales to remain subdued in current fiscal: IcraOrissa Slurry Pipeline Ltd, he said, is a separate entity owned by SREI Infrastructure and Essar Steel, and was not part of the original offer to sell Essar Steel. Clubbing it with Essar Steel in the sale would benefit Lakshmi Mittal-run firm. Sibal argued that acceptance of Rs 39,500 crore as the bid amount by the Committee of Creditors (CoC) of Essar Steel, to which Standard Chartered Bank (SCB) was not part, is contrary to the undertaking given by ArcelorMittal to the Supreme Court. Also Read – Ashok Leyland stock tanks over 5 pc as co plans to suspend production for up to 15 daysHe alleged that the truncated CoC of four members privately negotiated with ArcelorMittal to get a Slurry Pipeline, which is not even an asset of Essar Steel. An amount of Rs 2,500 crore, which should have been paid to Standard Chartered, has been diverted to lenders of Odisha Slurry Pipeline India Ltd, which owns the slurry pipeline. Such private negotiations should not have been undertaken by the four members of the CoC, which are to the detriment of the stakeholders of Essar Steel and concern assets of a different company altogether, he said. Standard Chartered had filed a plea in the National Company Law Appellate Tribunal (NCLAT) opposing a decision by a lower court to sell Essar Steel to ArcelorMittal as it stands to lose a substantial part of loans it had extended to Essar. Standard Chartered is to get just 1.7 per cent of its outstanding claims while the financial creditors were recovering close to 92 per cent of their claims from the sale proceeds. Sibal also questioned the authority of the CoC to distribute money received from the auction of Essar Steel saying it was only empowered to approve or reject a resolution plan. He protested that Standard Chartered was not allowed to be present and become part of voting at the CoC, which comprised lenders for slurry pipeline project also. SCB also argued that profits made by Essar Steel during the insolvency period were being misappropriated by ArcelorMittal. Such funds are otherwise required to be distributed amongst creditors. The NCLAT directed a day-to-day hearing of the case and posted the matter for hearing on Tuesday when Sibal will continue his arguments. ArcelorMittal sought time for its senior counsel Harish Salve to appear on its behalf on May 20 or May 24. The NCLAT had last week sought a response from ArcelorMittal on a petition filed by a majority shareholder of Essar Steel seeking rejection of the Rs 42,000 crore bid alleging that its promoter Lakshmi Mittal hid his association with loan defaulting firms run by his brothers.last_img