ArcelorMittal's Acquisition Of Essar Steel Approved By Committee Of Creditors

(RTTNews) - Steel giant ArcelorMittal (MT) announced Friday that the Committee of Creditors or CoC of Essar Steel India Limited or ESIL has voted to approve the company's acquisition of ESIL.

ESIL's Resolution Professional, on behalf of the CoC, has issued the Company with a Letter of Intent stating that ArcelorMittal has been identified as the 'Successful Applicant'.

Further to ArcelorMittal being named the H1 Resolution Applicant on October 19, ESIL's CoC has now approved the Company's Resolution Plan for ESIL, with the LOI identifying it as the 'Successful Resolution Plan'.

The Resolution Plan includes an upfront payment of 42,000 crore rupees or about $5.7 billion towards ESIL's resolution debt, with a further 8,000 crore rupees or about $1.1 billion of capital injection into ESIL to support operational improvement, increase production levels and deliver enhanced levels of profitability.

ESIL is an integrated flat steel producer, and the largest steel company in western India. Its current level of annualised crude steel production is c. 6.5 million tonnes.

ArcelorMittal's Resolution Plan details its intention to increase ESIL's finished steel shipments to 8.5 million tonnes over the medium-term, and a long-term aspiration to increase finished steel shipments to between 12 and 15 million tonnes.

In-line with ESIL's corporate insolvency process, the Company's Resolution Plan must now be formally accepted by India's National Company Law Tribunal or NCLT before completion, which is expected before the end of 2018.

After completion, ArcelorMittal will jointly own and operate ESIL in partnership with Nippon Steel & Sumitomo Metal Corp., Japan's largest steel producer and the third largest steel producer in the world, in-line with the joint venture formation agreement signed with NSSMC on 2 March 2018.

ArcelorMittal and NSSMC expect to finance the joint venture through a combination of partnership equity and debt, and ArcelorMittal anticipates that its investment in the joint venture will be equity accounted.