ArcelorMittal facing excess capex ‘risks’ on proposed Essar acquisition

London: ArcelorMittal on Monday said it is staring at various risks including excess capex and delays in achieving commercial objectives in view of its proposed acquisition of debt-laden Essar Steel India. “Should the Resolution Plan be implemented, as is currently expected, it would subject ArcelorMittal to various risks.

On the operational front, the industrial project to turnaround ESIL and further improve operational profitability is large-scale and ambitious,” ArcelorMittal said in its annual report released today: “Capital expenditure in excess of budgeted amounts, delays and difficulties in achieving commercial objectives therefore cannot be ruled out,” the company said.

“The JV’s proposal, set out in the plan detailing the amount due to existing creditors and towards capital infusion (totalling USD 6.8 billion and including approx USD 340 million of guaranteed working capital adjustment) and the improvements and related capital expenditures (totaling USD 2.8 billion) to be made over the medium-term, has been approved by the creditors’ committee and is pending final judicial review,” it said.

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