The shattered investors of Essar Steel have finally received communication from ArcelorMittal Nippon Steel Company stating that their holdings have been cancelled in line with the insolvency resolution plan approved by the Supreme Court.
Earlier, investors had expressed shock when they found that the shares suddenly went missing from their demat accounts at a time when broking firms are freely raising money by pledging investors’ stocks.
While banks have done well to settle their outstanding Essar Steel loan of Rs 49,000 crore for Rs 42,000 crore by burning Rs 7,000 crore, the poor small investors and operational creditors have been left in the lurch, said an investor with 200 shares of Essar Steel.
On the contrary, wealthy corporates have designed a business model of buying stressed assets at a throwaway price from banks, and making a killing on them when the loans are settled, he added.
Last February State Bank of India put its outstanding Essar Steel loan of Rs 15,431 crore on auction, but had to shelve it due to unrealistic clauses.
About 10 per cent of Essar Steel’s shares are still held by small investors, even after the company made an open offer for delisting the shares, as the offer price then was very low.
In an e-mail statement to investors, Pankaj S Chourasia, Company Secretary, Essar Steel India said in connection with the corporate insolvency resolution process of Essar Steel India, the resolution plan submitted by ArcelorMittalIndia had been approved by the Supreme Court through its judgement dated November 15, 2019, after considering the judgement of the National Company Law Tribunal, Ahmedabad and the National Company Law Appellate Tribunal.
Section X, Part B of the Resolution Plan provides for capital reduction of the entire existing issued, subscribed and paid-up share capital (both equity and preference) of the company held by the existing promoters and public shareholders, such that ArcelorMittal India (along with its nominee shareholders) will be the sole shareholder of the company.
Accordingly, it said the entire existing issued, subscribed and paid-up share capital (both equity and preference) of the company stood cancelled and extinguished with effect from December 16, 2019.
Pursuant to such capital reduction and cancellation, the shares of the company held by investors had been debited from their demat accounts, it added.
Share certificates held in physical form would also not be valid henceforth, it said.
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January 02, 2020 at 10:45AM
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ArcelorMittal informs Essar Steel investors about cancellation of their holding in company - BusinessLine
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