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Unaware of Arcelor's move to clear dues, say Uttam Galva promoters

Press Trust of India/New Delhi 17 May 18 | 02:30 AM

Uttam Galva Steels promoters on Wednesday said they were unaware of the reported ‘unsolicited’ move by ArcelorMittal to transfer about Rs 70 billion to the State Bank of India (SBI) to clear overdue loans of the company.


Uttam Galva Steels Chairman Rajinder Uttamchand Miglani said the founders had in February bought out ArcelorMittal’s 29.1 per cent stake in the company after a request of the same came from them. But, this time around, there had been no communication with ArcelorMittal on the clearing of the company dues, he said.

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“We are not aware of any such move. I have no communication of any kind," he said in response to a question on the ArcelorMittal’s reported move to transfer about Rs 70 billion to an escrow account maintained by SBI.


He said Uttam Galva had in the past asked ArcelorMittal, which till February was classified as a promoter of the company, for help to clear dues. “There was no response then," he said, adding no solicitation was made to ArcelorMittal this time around.


“We are not aware of any move (by ArcelorMittal) to transfer funds as we are in NCLT," he said, adding the sectoral issues faced by Indian and global steel market in 2015-16 had hit the company’s financial performance very hard and led to default.


ArcelorMittal declined comments on Miglani’s statement.


Miglani said the founders have no knowledge of what communications ArcelorMittal is having with the financial institutions. “It is as much Greek to me as it is to you. I have no knowledge of what is happening," he said.


Uttam Galva owes Rs 56.54 billion to 18 banks, largest among them is SBI.


ArcelorMittal has reportedly transferred Rs 70 billion to SBI to clear dues of defaulters Uttam Galva and KKS Petron so that it becomes eligible to bid for acquisition of Essar Steel.


The move followed its bid for Essar Steel coming in for questioning because of its past shareholding in loan defaulter firms. The insolvency and bankruptcy rules bar a delinquent promoter from bidding for a company or asset that is being auctioned to recover bank dues.


ArcelorMittal wants the funds transferred in an escrow account to be used to pay off outstanding dues of Uttam Galva Steel as well as KSS Petron.


Yesterday, the company had said that: "Any offer to pay any outstanding loans of companies where we only had a passive stake with no management or governance role, would be made without prejudice to demonstrate the seriousness of our commitment to India and Essar Steel India Ltd (ESIL)." "We continue to believe that a swift resolution is in the best interests of ESIL and its stakeholders, including its employees who deserve a strong and certain future," it had said.


ArcelorMittal is locked in a direct fight with Russia's VTB Capital-backed NuMetal Ltd in the takeover battle of Essar Steel, which is being auctioned for defaulting on payment of Rs 49,000 crore bank loans.


NuMetal's bid had also come in for questioning as it was 25 per cent owned by Aurora Trust of Ruia family - the promoters of Essar Steel. However, later VTB Bank sought to severe ties with Ruia family by proposing to buy out Aurora Trust's stake in NuMetal.


A committee of Essar Steel lenders had on May 8 given the two bidders one week time to "cure their disability" by paying of dues of the defaulting companies of which they were shareholders or promoters.


ArcelorMittal parking the fund with SBI came as the deadline ended yesterday.


On May 9, the company had written to the Committee of Essar Steel Creditors asking if its May 8 order was to state it the lenders can reject its bid for Essar Steel after the overdue amounts are paid in full.


"It makes no commercial sense for us to pay these amounts and then suffer the same disqualification at the hands of the CoC, it had written in a two-page letter to the Committee of Creditors (CoC), which was reviewed by PTI.


The company had yesterday confirmed that it had written to CoC but said: "the details of this letter are confidential." ArcelorMittal said its February 12 bid for Essar Steel is and always has been eligible.


While ArcelorMittal had exited Uttam Galva by selling its stake to promoters before the bid, its never had a management say by virtue of stake in holding company of KSS Petron.


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