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The battle to acquire Essar Steel is spiralling into a full blown war, with Sajjan Jindal-promoted JSW Steel accusing ArcelorMittal of suppressing facts related to the non-disposal agreement signed with lenders of Uttam Galva.
Terming as illegal the move by ArcelorMittal, to transfer its shares in debt-laden Uttam Galva, Seshagiri Rao, Joint Managing Director, JSW Steel, told BusinessLine that the application for promoter declassification has a column seeking details on promoter's shares in encumbrance, pledge, lien, non-disposal undertakings. But ArcelorMittal had left this column blank when it sought to declassify itself as a promoter of Uttam Galva.
Being a promoter of Uttam Galva in 2011, he said ArcelorMittal had agreed not to sell its shares in Uttam Galva without the permission of a consortium of banks, led by SBI, that had provided a ₹1,400-crore loan to the latter.
“If ArcelorMittal had disclosed the agreement stock exchanges would have asked for a lenders' no objection certificate, which it would not have got without repaying the defaulted loan. The suppression of fact is not only a breach of trust, but also makes the share transfer illegal,” he said.
While SEBI norms permit transfer of shares within the promoters group, Rao said that this could have happened in this case had Uttam Galva not defaulted on its loan.
“ArcelorMittal is trying to take cover behind JSW Steel. It is drawing a parallel with JSW Steel's eligibility to bid for sick companies under the Insolvency and Bankruptcy Code by throwing out dissimilar facts,” he said.
ArcelorMittal denies
However, ArcelorMittal has denied the JSW Steel's allegation saying its disqualification in the first round of Essar Steel bidding was technical.
The company's spokesperson said: “The allegation made by JSW has nothing to do with the reason why the Resolution Professional deemed ArcelorMittal ineligible”.
“JSW is making that up. It was a pure technical reason as we had not yet been declassified (as promoter of Uttam Galva) then. Nothing else. Also, there is no breach (of law),” he added.
JSW Steel's fresh salvo against ArcelorMittal comes even as the Ahmedabad Bench of the National Company Law Tribunal is expected to deliver on Monday its ruling on the eligibility of both ArcelorMittal and Numetalfor Essar Steel bidding.
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