Essar Steel to Sell Infra Assets to Arcelor Mittal Nippon Steel
The closing of the deal, which involves assets in Gujarat, Andhra Pradesh and Odisha, is subject to the completion of corporate and regulatory approvals. Essar Group agreed to sell some of its ports and power and transmission assets to Arcelor Mittal Nippon Steel India (AM/NS) for about $2.4 billion (around Rs19, 000 crore). The two entities also agreed to form an equal JV to build a 4 mtpa liquefied natural gas (LNG) terminal at Hazira in Gujarat. The closing of the deal, which involves assets in Gujarat, Andhra Pradesh and Odisha, is subject to the completion of corporate and regulatory approvals. AM/NS acquired Essar Steel’s 10 mtpa integrated steel plant in Hazira for Rs 42,000 crore under a bankruptcy auction. The assets in Hazira, which have been sold now, were the subject of a tussle earlier, with AM/NS claiming they were built primarily as captive units for the steel plant and, thus, their ownership should be transferred along with the steel plant. However, these assets were ultimately not included under the insolvency resolution of the Hazira plant. The Essar Steel case was one of the 12 large cases admitted for bankruptcy resolution. AM/NS is a joint venture between Arcelor Mittal and Nippon Steel, two of the world’s largest steel companies. A statement from AM/NS said these assets are either captive (including port assets in Gujarat, Andhra Pradesh and Odisha) or allied to AM/NS India’s steelmaking and will strengthen the strategic integration of its manufacturing and logistics chain. “Full ownership of the strategically located port assets in Gujarat, Visakhapatnam and Paradip will ensure seamless connectivity and supply chain security for the movement of raw materials and finished goods between AM/NS India’s manufacturing facilities in western, eastern and southern India, as well as for exports. Acquisition of the power and transmission assets will ensure cost-effective, long-term power supply and energy efficiency at Hazira. The Essar Steel case was one of the 12 large cases admitted for bankruptcy resolution. AM/NS is a JV between ArcelorMittal and Nippon Steel. The assets being acquired are cash-accruing and will generate operational synergies immediately upon completion of the transaction. AM/NS India will be able to realize further synergies from rising throughput at the port assets as a result of the company’s planned expansion of steel production capacity.
Tags : Essar Steel Infra Assets Nippon Steel Gujarat Andhra Pradesh Odisha assets Hazira ownership Visakhapatnam southern India steel production capacity