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ArcelorMittal in talks with lenders on payment of dues as deadline looms

Ishita Ayan Dutt/Kolkata 11 Oct 18 | 10:05 PM

ArcelorMittal is in discussions with lenders for payment of dues for Uttam Galva Steels and KSS Petron as the Supreme Court-mandated deadline of October 18 is nearing.

The Supreme Court (SC) had on October 4 granted time to ArcelorMittal and Numetal to clear dues for non-performing assets (NPAs) to be eligible to bid for Essar Steel.

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It is likely that Arcelor would have to cough up more than Rs 70 billion, the amount it had parked for the purpose.

When the committee of creditors demanded a no dues certificate from Arcelor and Numetal, in keeping with the National Company Law Tribunal order, Arcelor had parked Rs 70 billion in its current account and made a conditional offer to lenders. It said the payment would be made subject to Arcelor being declared a successful and eligible bidder for Essar.

“At the time, banks had indicated an immediate payment of Rs 55 billion on account of Uttam Galva and Rs 15 billion to be paid over three years. For KSS Petron, the payout was to be Rs 10 billion," said sources close to development. 

The amount was indicated by banks in mid-May.

ALSO READ: Essar Steel bid: ArcelorMittal, Numetal get two weeks to clear dues

The payment that has to be made includes, apart from principal and interest, penal interest and other charges and other additional overdue amounts that have accrued till the date of payment.

“The payment on account of Uttam Galva would be more than Rs 70 billion with a penal interest at 18 per cent," a source said. Arcelor declined to comment.

Whatever the amount, it would make Arcelor just eligible to bid for Essar. Arcelor has already revised its bid for Essar to Rs 420 billion.

While Arcelor is negotiating with lenders, at least two other players — VTB and JSW Steel — are weighing solo bids and seeking legal opinion as Numetal’s dues were likely to be in excess of Rs 390 billion.

VTB is the major partner in the Numetal consortium and JSW Steel is an investor in its step-down subsidiary.

In May, the principal and interest amount for Numetal was Rs 375.58 billion and penal interest and other charges at Rs 16.85 billion. But, according to the SC order, Numetal might have to pay for other Ruia group companies that were classified as NPAs for more than a year before submission of resolution plan.

ALSO READ: Numetal to match ArcelorMittal's $5.8-billion bid for Essar Steel

But if VTB moved a plea for a solo bid, it could open a new legal front. The SC would be taking a break for Dussehra and by the time it comes back, the deadline for payment would be over.

For Arcelor, too, even if the dues are more than Rs 70 billion, it would have to take a call on payment one way or the other, another source said.

The SC had exercised its extraordinary power under Article 142 of the Constitution in granting Arcelor and Numetal an opportunity to meet due payments. Apart from Arcelor and Numetal, Vedanta is also in the fray for Essar. Vedanta has offered Rs 340 billion for Essar.

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