Billionaire Lakshmi Mittal’s ArcelorMittal said its 29% equity stake in Uttam GalvaBSE 0.20 % Steels will not impede them from participating in bidding for stressed steel assets in India.
“We hold a non-controlling minority shareholding in Uttam Galva, have no representation on the board of directors, nor influence on management decisions. As such, we are not a promotor of Uttam Galva. Therefore, there is no objective reason for Arcelor-Mittal to be prevented from bidding for any steel asset under the restructuring process,” ArcelorMittal said responding to ET’s email query.
The Luxembourg-headquartered company is a minority shareholder in Uttam Galva, a declared defaulter, but has no management control or board position in the Indian company. This should allow the world’s largest steelmaker to remain in the fray for Essar SteelBSE 0.41 % and Bhushan SteelBSE 1.14 %, as the amended rules prohibit only promoters or sister concerns of companies with non-performing assets from bidding for other stressed assets.
ArcelorMittal Netherlands BV holds a minority stake of 29% in Uttam Galva, but along with the Miglani family, the Indian promoters, the foreign company is listed as one of the promoters of the company in Bombay Stock Exchange filings.
“We are a widely recognised and highly creditworthy international investor and hence do not believe that this amendment should prevent Arcelor-Mittal from bidding for distressed steel assets in which we have had no prior involvement,” ArcelorMittal said This caused some confusion with divergent views from the legal fraternity.
While under the Sebi Act, the stock exchanges view ArcelorMittal as a promoter of Uttam Galva, the companies Act, viewed them as a minority investor. “It is open to interpretation,” a person closely involved with the process said.
ArcelorMittal was, however, emphatic that they do not fall under the ambit of a promoter, and therefore free to bid for the stressed assets that are now available through the bidding process. Aditya Mittal, CEO of ArcelorMittal Europe responsible for mergers and acquisitions has made a flying visit to India scouting for assets that are on the block.
The scion is said to have visited the Essar Steel complex in Hazira as part of the exercise, as the company with promoters of Indian origin have been struggling for long to put significant greenfield assets in India. Industry buzz is that the foreign steelmaker is also interested in Bhushan Steel.
The government move to amend the bankruptcy code on 23 November to forbid the promoters of India’s so-called ‘dirty dozen’ from bidding for stressed companies by labelling them as wilful defaulters saw many promoters of troubled assets out of the race to reacquire their companies. A section of the legal fraternity felt that this could reduce the competitive intensity of assets that may help recover a part of about Rs 9 lakh crore in outstanding debt.
Source: Economic Times