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ArcelorMittal gets nod for Essar Steel, but Ruias might not give up

The offer, if it goes through, means financial creditors would have to take a haircut of 14% considering that ArcelorMittal would settle Rs 42,000 crore out of their total claims of Rs 49,000 crore.

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The insolvency and bankruptcy court has approved ArcelorMittal's bid to take over Essar Steel after a long legal tussle but the saga of the country's test case for large non-performing asset resolution might not be over.

The offer, if it goes through, means financial creditors would have to take a haircut of 14% considering that ArcelorMittal would settle Rs 42,000 crore out of their total claims of Rs 49,000 crore.

It also means a significant loss for the operational creditor who would get a paltry Rs 196 crore against their accepted claim of Rs 5,058 crore.

As a way out, the Ahmedabad bench of the National Company Law Tribunal (NCLT), in its judgment, has asked the lenders to set aside 15% of the bid value for the operational creditors.

Essar Steel's operational creditors had moved the NCLT against Arcelor-Mittal's takeover with a plea to accept Ruias' bid of Rs 54,389 crore would have satisfied everybody with no haircut.

However, the NCLT dismissed their pleas saying that the court might direct ArcelorMittal to tweak their repayment plan.

But Ruias, the original promoter of Essar Steel, might not give up its legal fight.

"We are awaiting a copy of the NCLT order, and will take a call on next steps after examining the same," read a statement issued by the family office of the Ruias post the NCLT verdict.

Ruias, it said, believe its settlement proposal is the most compelling one available to Essar Steel creditors and fulfils the IBCs declared, overriding the objective of value maximisation.

"We are also confident of the legal validity of our said offer made under Section 12A, which provides for the withdrawal from the IBC process by making full payment to the creditors," it said.

GREEN LIGHT BLINKS

Global steel giant set to take over the crippled Essar Steel for Rs 42,000 crore with Ahmedabad bench of NCLT giving go-ahead; resolution process crossed 270-day deadline long ago after Ruias, the steel mill’s original promoter, threw up a series of legal challenges

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