ArcelorMittal, which is the world’s biggest steel producer, recently announced that the creditors of Essar Steel have voted in favour of the company’s Rs.42,000 crore bid. ArcelorMittal also stated that Essar Steel has issued a letter of intent for the same. The creditors of Essar Steel chose ArcelorMittal as the successful applicant on 25 October 2018.
Although ArcelorMittal’s proposal has been approved by Essar Steel, the transaction still requires the approval of the National Company Law Tribunal (NCLT). ArcelorMittal announced that it expects to receive the NCLT’s consent before the completion of the current year. Once the company receives approval from the NCLT, the steel producer will gain ownership of Essar Steel.
For the Essar Steel deal, ArcelorMittal has partnered with Nippon Steel and Sumitomo Metal Corporation, which is the largest steel producer in Japan and the third-biggest steel producer globally. ArcelorMittal, in its proposal, offered to pay a sum of Rs.41,987 crore to financial creditors and a sum of Rs.214 crore to employees and operational creditors. Further, ArcelorMittal has said it will infuse an additional sum of Rs.8,000 crore into the company in an effort to enhance profitability, support operations, and increase production.
The joint venture partnership will in total finance Rs.50,000 crore via two-thirds of debt and one-third of equity.
Sources: The Economic Times, The Times of India