November 11: ArcelorMittal, which won Essar Steel after going through a spate of litigations and some 865 days, was on Tuesday asked by the Ahmedabad Bench of the National Company Law Tribunal (NCLT) to pay Rs 1,300 crore to Odisha Slurry Pipeline Infrastructure (OSPIL) for using its assets.

In its 322-page order, the tribunal said the charges for the use of slurry pipeline for running Essar Steel as a going concern were corporate insolvency resolution process (CIRP) costs, Business Standard reported. The NCLT was hearing an application moved by Srei Infrastructure Finance, a financial creditor of OSPIL.

The additional cost comes 11 months after the joint acquisition of Essar Steel by ArcelorMittal and Nippon Steel in a Rs 42,000-crore deal. The new entity was renamed AM/NS India. The resolution became one of the biggest success stories under IBC as secured financial creditors recovered 90 per cent dues. But the latest directive opens yet another chapter in the process. ArcelorMittal has been asked to pay by December 15, failing which the NCLT can pass a liquidation order against Essar Steel.

OSPIL owns and operates the 253-km slurry pipeline, connecting AM/NS India’s iron ore beneficiation plant in Dabuna with the 12-million tonne pellet plant in Paradip. It is a critical asset for the steel plant and was leased to Essar. This arrangement with OSPIL was captured in the right to use agreement. Incidentally, OSPIL’s shareholding was such that India Growth Opportunities Fund, a scheme of Srei Multiple Asset Investment Trust, had a 69 per cent equity while the balance was with Essar Steel.

However, OSPIL landed up in NCLT, as it defaulted on payment to lenders. 

ArcelorMittal submitted a Rs 2,359 crore resolution plan, which was approved by the Cuttack Bench of the NCLT earlier this year, even as Srei Infra had challenged it in the National Company Law Appellate Tribunal (NCLAT). A decision is pending.

The right to usage charges calculated by Srei amounts to Rs 1,300 crore. The NCLT held that ArcelorMittal — the resolution applicant for Essar Steel — had contravened the provisions of the approved resolution plan by not making payment of CIRP costs that had been provided in the resolution plan and approved by the adjudicating authority.

Earlier, ArcelorMittal had to part with an additional Rs 7,469 crore for defaulting companies – Uttam Galva Steels and KSS Petron – to become eligible for the Essar bid.

https://www.business-standard.com/article/companies/nclt-directs-arcelormittal-to-pay-rs-1-300-cr-for-use-of-slurry-pipeline-120111101215_1.html

0 CommentsClose Comments

Leave a comment