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A recent SBI communication to ArcelorMittal, questioning its locus standi to repay a $48-million loan availed by the steel giant’s erstwhile group entity, Uttam Galva, may become another stumbling block for the Lakshmi Mittal-owned company in its bid for stressed asset Essar Steel.
ArcelorMittal, the world’s largest steel maker, is engaged in a pitched battled with Russia’s VTB Bank-promoted for the control of Essar Steel.
In February, ArcelorMittal Netherlands had sold its entire 29 per cent stake in Uttam Galva to the Miglani family for ₹1 and agreed to pay back the loan facility availed by the latter to make itself eligible for Essar Steel.
The State Bank of India also pulled up ArcelorMittal for breaching the non-disposal agreement signed as a sponsor for the Uttam Galva loan facility.
However, a company spokesperson denied any wrongdoing. “ArcelorMittal divested its passive shareholding in Uttam Galva following all due processes. ArcelorMittal firmly believes that there has been no violation of a non-disposal agreement,” said a spokesperson for the company.
As per the credit facility agreement, the SBI letter in April said the primary obligation to pay interest and all other outstanding principal amount is on Uttam Galva.
“We understand from your (ArcelorMittal) correspondence that you have deposited money in an offshore account standing in your name at SBI, London. Therefore, please let us know in what manner lenders can accept the amount deposited by you in an offshore account maintained by you towards the dues of Uttam Galva under the credit facility agreement, if all lenders choose to accept,” it said.
It added: “Please note that any acceptance of the amount deposited by you may be subject to regulatory consents, which ought to be procured by Uttam Galva and you.”
“We would like to state that your choice of depositing any amounts towards the Uttam Galva dues...is your independent choice and shall not be considered to have any bearing with the plan submitted by you under the Essar Steel resolution,” said SBI.
“The choice of depositing the money against Uttam Galva dues does not in any manner imply that we are condoning the breaches under various financing documents including Non-Disposal agreement,” it said. Such deposit will also not have any bearing on insolvency proceedings initiated by SBI against Uttam Galva under the Insolvency and Bankruptcy Code, said the letter.
Uttam Galva was declared a non-performing asset in September 2016 after it defaulted on its ₹6,000-crore debt. SBI initiated bankruptcy proceedings against the company in the National Company Law Tribunal last year.
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