The lenders of debt-ridden Uttam Galva Steels Ltd (UGSL) on Wednesday almost unanimously approved the resolution plan of Europe’s largest steelmaker ArcelorMittal Group, said three people close to the development.
On October 1, last year, the Mumbai bench of the National Company Law Tribunal (NCLT) had admitted an insolvency petition against the debt-laden Uttam Galva Steels Ltd (UGSL) in a petition filed by the State Bank of India (SBI).
The company had defaulted on its External Commercial Borrowing (ECB) facility extended by the bank to the tune of $6.6 million in November 2019.
SBI sent a reminder on January 3, 2020, to the Respondent demanding payment of the amount. However, Uttam Galva Steel Ltd, in its letter dated January 17, 2020, did not oppose the fact of the default. It, however, expressed its inability to pay on account of bad financial condition. Subsequently, SBI had approached the tribunal under Corporate Insolvency Resolution Process (CIRP).
At the beginning of April 2020, UGSL was reported for defaulting on more than Rs 600 crore owed to lenders, as the company said that it was impacted by the viral pandemic. UGSL also shut its plants and operations after the lockdown and said it has an outstanding of Rs 1,008 crore to its creditors. The company reported a net loss of Rs 160 crore during the June quarter.
The loans were taken over by ArcelorMittal, which paid off Rs 4,922 crore to the secured financial lenders of UGSL including SBI, and later, the overdue principal paid was assigned to ArcelorMittal India.
The company owes over Rs 9300 crore to its lenders where ArcelorMittal Group has over 85% voting rights in the Committee of Creditors (CoC).
When contacted, Milind Kasodkar resolution professional (RP) of the company confirmed the development and said that very soon the plan will be submitted to the NCLT for its approval.
Uttam Galva reported about a 63% year-on-year jump in net sales at Rs 190.45 crore at the end of the March quarter last financial year. The net loss narrowed to Rs 68.7 crore from Rs 536.04 crore in the corresponding quarter last year.
Earlier in March this year, ArcelorMittal emerged as the sole bidder for the indebted Uttam Galva Steels. About half a dozen companies including JSW Steel, Jindal Steel & Power (JSPL) and Vedanta-owned ESL Steel, had submitted an expression of interest (EOI) for Uttam Galva.
The resolution plan was reportedly submitted by AM Mining India.
