ArcelorMittal’s plan to buy a bankrupt Indian steel company for $6 billion was halted temporarily by the nation’s top court, further delaying tycoon Lakshmi Mittal’s efforts to enter the world’s second-biggest market.
The Supreme Court ruled that Essar Steel India Ltd’s current status has to be maintained, pending a review by a bankruptcy tribunal hearing appeals related to the sale. The company is currently being managed by a court-appointed administrator. The ruling was in response to petitions by banks, including Standard Chartered Plc.
A lower court had last month approved Arcelor and its partner Nippon Steel Corp’s offer to pay $6 billion upfront to lenders and invest another $1.1 billion in the Indian steel company.
The court decision disappointed foreign exchange traders, who were expecting an inflow of dollars into India due to the transaction. The rupee extended its drop to as much as 0.6 percent after the court ruling. Shares of State Bank of India — the biggest lender to Essar Steel — declined as much as 1.2 percent in Mumbai, while Arcelor’s stock fell as much as 1.8 percent in Amsterdam. Both stocks later erased the losses. The court order may delay Arcelor’s plans to take control of Essar’s steel mill in the western state of Gujarat, which has 10 million metric tons a year of capacity.
The deal would have made Mittal the fourth-biggest producer in a nation where the government is investing trillions of rupees in infrastructure. The bankruptcy court overseeing the sale had asked a panel of lenders to consider higher payments to Standard Chartered, which said a substantial part of its $505 million in dues would remain unpaid under Arcelor’s plan for
the distribution of money among lenders.