Mumbai, Oct 25 (IANS) In a bid to take back the control of their asset, Essar Steel on Thursday said its board and shareholders submitted a proposal to the Committee of Creditors (CoC) offering to repay Rs 54,389 crore and also sought withdrawal from insolvency proceedings.
"The shareholders of Essar Steel have today (Thursday) submitted a proposal to the Committee of Creditors (CoC) for full settlement of the entire admitted claims of the financial creditors, operational creditors, and workmen and employees of Essar Steel India Ltd (ESIL), aggregating Rs 54,389 crore, under Section 12A of the Code," it said in a statement.
The plan includes an upfront cash payment of Rs 47,507 crore to all creditors, including Rs 45,559 crore to the senior secured financial creditors, i.e. 100 per cent recovery.
The dramatic move from the company comes even as the CoC of the debt laden firm had declared ArcelorMittal as the highest bidder in the auction for the steel company.
"If the CoC were to accept the resolution plan currently under consideration, it will have to settle for a sizeable haircut. Moreover, the offer does not provide for meaningful payment to operational and other unsecured creditors," it said.
The CoC is empowered to consider and approve this "Settlement Plan" with the requisite voting share on the basis of which the corporate insolvency resolution process against the company may be withdrawn, it added.
Commenting on the proposal, Prashant Ruia, Director, Essar, said: "The company got into difficulty because of external factors. Regardless, the value and quality of the asset can be ascertained from the interest shown and value offered by all the global steel majors."
He further said, "In fact, even after the onset of the insolvency resolution process, the shareholders of Essar Steel had made offers to settle the debt of the company, but the lenders did not accept those offers. We believe our current proposal will provide 100 per cent recovery to secured creditors and lenders, and maximum recovery for unsecured creditors."
