Rs 2,500 crore in ArcelorMittal bid for Essar Steel is working capital: CoC
New Delhi: The lenders of Essar Steel Thursday informed the NCLAT that out of Rs 42,000 crore coming from the resolution plan of ArcelorMittal, Rs 2,500 crore has been marked as the working capital of the debt-laden firm. The Committee of Creditors (CoC) submission before a National Company Law Appellatre Tribunal (NCLAT) implied that only Rs 39,500 crore would be available for distribution among the financial creditors and operational creditors.
Senior advocate Gopal Subramanium representing the CoC informed the appellate tribunal that the actual upfront amount is Rs 39,500 crore and the rest Rs 2,500 crore has been committed as working capital for Essar Steel. In Monday's hearing, Standard Chartered, one of the secured financial creditors, claimed that bankers have clubbed Orissa Slurry Pipeline Ltd (OSPL) with Essar Steel in the auction to recover unpaid loans.
It alleged that Rs 2,500 crore, which should have been paid to Standard Chartered, has been diverted to lenders of OSPL. On this, the COC clarified that the current resolution plan is only for Essar Steel Ltd and OSPIL Ltd is not part of it.
"It is a fact that in the Supreme Court offer was made for Rs 42,000 crores. But in the final judgment, the Supreme Court only referred to the previous offer of Rs 35,000 crore. Ultimately, after a lot of discussion it was raised to Rs 39,500 crore," Subramanium submitted. He further said: "Then there was a discussion on working capital. We said please guarantee Rs 2,500 crore. So total upfront payment is Rs 42,000 crore." According to him, this Rs 2,500 crore is the minimum guarantee to the creditors of Essar Steel irrespective of whether the company is in profit or loss during the pendency of the insolvency resolution process.
"We wanted a guarantee that if it was a minus, at least Rs 2,500 crore you must commit. If, however, there is actually profit, whatever is actually profit, will be given to lenders. We said alright," he said. Subramanium added: "If it is negative, there is Rs 2,500 crore and . Whatever excess of Rs 2,500 crore is there, it would be given back to the creditors."
A two-member NCLAT bench headed by Chairman Justice S J Mukhopadhaya also directed the CoC to submit a distribution chart of the money coming from ArcelorMittal.