ArcelorMittal, the world’s biggest steelmaker, has completed its Rs 2,350-crore acquisition of Odisha Slurry Pipeline Infrastructure after paying lenders the full principal amount, securing a crucial asset for its newly acquired 10-MTPA Essar Steel plant in Hazira.
Lenders received the payment last week ensuring recovery of loans that were due for more than five years.
“All financial creditors have received their full principal amounts last week, which means we have managed a large recovery during this lockdown,” said RK Bansal, CEO of Edelweiss ARC, which owned 8% of the debt.
Odisha Slurry runs a 253-km long pipeline supplying iron ore from mines to the Hazira plant, which was acquired by the ArcelorMittal-Nippon Steel combine through an insolvency process from the Essar Group last year.
In March, the NCLT had approved the ArcelorMittal resolution plan after a committee of creditors (CoC) led by IDBI Bank NSE -0.65 % unanimously voted in its favour.
However, India Growth Opportunities Fund (IGOF), an arm of Srei Infrastructure Finance that owns 69% stake in Odisha Slurry, has opposed the deal in the National Company Appellate Tribunal (NCLAT) because it is not happy with the recovery amount. That case is still being heard.
Srei also is a financial creditor to Odisha Slurry as it had bought some debt from banks.
Bankers say even Srei as a financial creditor has received its payment; so the case now does not stand.
“The NCLAT had not stayed the resolution plan and the CoC had voted unanimously in favour of it; so lenders and the resolution professional took the call to execute the transaction. Srei has also accepted the payment, which tanamounts to favouring the resolution. We do not think Srei has any locus standi in this case anymore,” said a banker involved in the deal.
Srei did not comment, citing legal proceedings.
Srei has also challenged the sale of Odisha Slurry in Calcutta High Court besides NCLAT. A company official said they plan to continue with the litigation.
“Money has been transferred to the bank account; we did not ask for it. We will still pursue the matter legally because we think this asset is being undervalued in this process,” an official said, on the condition of anonymity.
Bankers said Srei’s contention would not stand legal scrutiny as it is a shareholder in a defaulting company that has no role in a bankruptcy process.
“To go through this deal was thought through carefully and we are confident it will stand. The fact that ArcelorMittal paid up confirms that even they are confident that Srei’s objections will not be taken seriously,” said the banker cited above.
ArcelorMittal did not respond to an email seeking comment.
Odisha Slurry owed a total of Rs 3,300 crore to financial creditors of which Rs 2,350 crore was the principal amount. Out of the total dues, Rs 2,100 crore was to banks and the remaining to other financial creditors like Srei.
By making this payment ArcelorMittal has secured a crucial infrastructure for raw material supply, which is one of the major advantages of the 10-MTPA Essar Steel plant in Hazira.
Source: Reuters.com