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The shattered investors of Essar Steel had finally received the communication from ArcelorMittal Nippon Steel Company through their brokers stating that their holding has been cancelled as per the insolvency resolution plan approved by the Supreme Court.
Earlier, investors had expressed their shock when they found that the shares suddenly went missing from their demat account without any intimation.
"While banks have made a big achievement by burning Rs 7,000 crore to settle its outstanding Essar Steel loan of Rs 49,000 crore for Rs 42,000 crore, the poor small investors and operational creditors are left in lurch," said an investor with 200 shares of Essar Steel.
In the contrary, wealthy corporates have designed a business model by buying stressed asset at a throw away price from banks and make a killing when the loans are settled, he added. In fact, State Bank of India (SBI) last February had put its outstanding Essar Steel loan of Rs 15,431 crore on auction but had to shelve it. About 10 per cent of Essar Steel shares were held by small investors even after the company had made an open offer for de-listing the shares as the offer price then was very low.
In an e-mail statement to investors, Pankaj S Chourasia, Company Secretary, Essar Steel India said in connection with the corporate insolvency resolution process of Essar Steel India, the resolution plan submitted by ArcelorMittal India has been approved by the Supreme Court through its judgment dated November 15, 2019, after considering the judgment of the National Company Law Tribunal (NCLT), Ahmedabad and National Company Law Appellate Tribunal (NCLAT).
Section X, Part B of the Resolution Plan provides for the capital reduction of the entire existing issued, subscribed and paid-up share capital (both equity and preference) of the company held by the existing promoters and public shareholders such that ArcelorMittal India (along with its nominee shareholders) will be the sole shareholder of the company.
Accordingly, it said the entire existing issued, subscribed and paid-up share capital (both equity and preference) of the company stood cancelled and extinguished with effect from December 16, 2019.Pursuant to such capital reduction and cancellation, the shares of the company held by investors have been debited from demat account, it added.
Shares certificates held in physical form will also be not valid henceforth, it said.
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