SC restrains ArcelorMittal from paying for Essar Steel

New Delhi: The Supreme Court on Friday restrained steel manufacturing giant ArcelorMittal from acquiring Essar Steel India and ordered status quo on the March 8 order of the National Company Law Tribunal (NCLT) approving Arcelor’s bid for Essar.

The Arcelor’s acquisition of Essar would have allowed Arcelor owner Lakshmi Mittal to begin its operations in the Indian steel market.

The tribunal had given its approval to the resolution plan offered by ArcelorMittal for the acquisition of Essar Steel.

The Committee of Creditors (CoC), however, moved the apex court opposing higher payment to Standard Chartered Bank (SCB).

After the Friday’s order, ArcelorMittal cannot make payments to the lenders to buy Essar Steel.

A bench headed by Justice Rohinton F. Nariman directed the NCLT to expeditiously decide on appeals in the case.

As per the tribunal order, SCB was allotted only 1.7 per cent of its total admitted claims, while the financial creditors were recovering their claims close to 92 per cent.

The NCLT had directed that the distribution should be done on a pro-rata basis, and SCB should be awarded its share accordingly.

The apex court order is bound to delay Mittal’s plan to buy the steel mill, which can produce 10 million metric tonne annually.

Post the acquisition, Arcelor will become the fourth-biggest player in the country. It plans to invest trillions of rupees in its infrastructure.

The NCLT had approved Arcelor’s and Nippon Steel Corp offer to pay $6 billion to lenders and then invest about another $1.1 billion in the company.

The CoC opposed the NCLT decision asking a panel of lenders to consider higher payment to SCB, and contested the Tribunal’s view that a substantial part of its Rs 35 billion ($505 million) dues would remain unpaid under Arcelor’s plan. The CoC claimed that the distribution of money among the lender as per the plan is unfair.

The panel of lenders and the State Bank of India challenged the tribunal’s direction in the top court.