NuMetal moves NCLT to stay eligible for Essar Steel
In a move that may complicate Essar Steel’s auction, Russia’s VTB Capital-owned NuMetal said it has has moved the Ahmedabad bench of the National Company Law Tribunal (NCLT) to reinforce its eligibility to bid for the stressed steel company.
NuMetal and ArcelorMittal are the only two parties that bid for buying out Essar Steel but the insolvency resolution professional overseeing the auction had been advised to reject both the bids owing to their promoters being linked to defaulter companies.
“Numetal Ltd filed an application on March 20 before the NCLT, Ahmedabad seeking a declaration that Numetal is eligible to submit a resolution plan for Essar Steel India Ltd,” the company said in a statement.
NCLT, it said, has ruled that any decision by the Committee of Creditors meeting will be subject to its final order of NCLT.
NuMetal is majority owned by Russia’s VTB Capital while TyazhPromExports (TPE) of Russia and Indo International being the other shareholder. Aurora Trust, which has links to Rewant Ruia – son of Essar Steel promoter Ravi Ruia, is “a minority shareholder with no right to directorship and management of Numetal,” the statement added.
The company said it apprehends that “full facts submitted by Numetal for determination of its eligibility to submit a Resolution Plan have not been appropriately assessed”. Accordingly, in the Application, all necessary facts for determining the eligibility of Numetal have been placed before the NCLT for an objective assessment.
“The NCLT, on hearing the counsel appearing for Numetal, issued a notice to the Committee of Creditors (COC) through the Resolution Professional. The NCLT also observed that any decision taken or resolution passed by the COC in the meeting on 21th March 2018 would be subject to the outcome of the Application,” said the company.
The next hearing is on April 4.The statement said the application was necessitated as “there is some apprehension that Numetal’s resolution plan may not be considered properly by the CoC”.
Also this was in view of various news reports suggesting that the Resolution Professional of Essar Steel has been advised that Numetal is not eligible to submit a Resolution Plan, and that the CoC would meet this week to consider the recommendation of the Resolution Professional in this regard, it further added.
Doubts being raised over the bids presented by Numetal and ArcelorMittal are connected with firms who have defaulted on bank loans. Numetal’s 25 per cent shareholder Rewant Ruia, the son of Essar Steel co-founder Ravi Ruia, and thus could be defined as a “connected person” under the IBC clause that prevents promoters of defaulting companies from bidding.
ArcelorMittal’s bid is also under the cloud because of its investment in Uttam Galva, which had defaulted on loan payments. The consortium behind NuMetal has previously stated that it is willing to buy out Rewant to ensure its offer for Essar Steel meets government rules. As much as Rs 51,800 crore of claims on Essar Steel have been admitted under the bankruptcy process.As part of the resolution proposal for Essar Steel, Numetal is proposing to raise production to full capacity at 9.7 million tonnes from the current level of 60 per cent.