(Bloomberg) -- A bankruptcy court approved ArcelorMittal’s offer to buy Essar Steel India Ltd., taking the world’s largest steelmaker closer to opening shop in the South Asian nation after months of court battles.
The National Company Law Tribunal on Friday approved the resolution plan submitted by ArcelorMittal and partner Nippon Steel & Sumitomo Metal Corp., according to ArcelorMittal ’s lawyer Ruby Ahuja. The court, which has yet to release a detailed copy of the verdict, had earlier rejected a late offer by the founders to get back control of the mill.
“We welcome today’s pronouncement by the NCLT Ahmedabad,” ArcelorMittal said in a statement. “While we will need to review the full written order once it becomes available, we hope to complete the transaction as soon as possible.”
In October, lenders to Essar Steel approved Arcelor and Nippon’s offer to pay 420 billion rupees ($6 billion) in an upfront cash payment to creditors and a further 80 billion rupees for capital infusion in the mill, the largest steel asset on the block under the bankruptcy law.
A last-minute offer by the founder Ruia brothers to pay back all debt led to a fresh round of court cases, delaying the sale further. The verdict will mark the highest loan recovery for lenders in a single case under India’s new bankruptcy law so far.
“All the lenders were anxiously waiting for this development,” Rajnish Kumar, chairman of the lead creditor, the State Bank of India, told television channel ET Now.“The court has given its decision and we are very happy about it. We will abide by the court order.”
Hotly Contested
Bidding for Essar Steel, which can produce 10 million metric tons of the metal annually, has been one of the most hotly contested under India’s insolvency resolution process, with legal wrangles in multiple courts and cut-throat bidding.
The sale is also ArcelorMittal’s chance to enter the Indian steel market after previous attempts to set up mills in the country failed to materialize. ArcelorMittal, led by billionaire Lakshmi Mittal, is keen to expand in India as economic growth drives steel demand and producers scale up capacity.
Shares of ArcelorMittal in Amsterdam were trading 3.9 percent lower at 3:11 p.m. local time.
However, this might not be the end of legal wrangles for ArcelorMittal as the company law tribunal’s verdict can be challenged further in higher courts. Essar is awaiting a copy of the court’s decision and will take a call on its next step after examining the order, the company said in a statement.
“We continue to believe that our settlement proposal of 543.89 billion rupees is the most compelling one available to Essar Steel creditors and fulfills the IBC’s declared overriding objective of value maximization,” according to the statement.
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