Bhushan Steel has appointed ICICI Securities to find a buyer for three or more of its oxygen plants in Odisha and hopes to raise Rs 1,000 crore by selling the non-core assets. Nittin Johari, whole-time director (finance) at Bhushan Steel, told FE the company is looking to sell some of its non-core assets after lenders had directed the company to do so.
?ICICI Securities has been given the mandate to look for a buyer for these plants which are part of our existing Odisha plant. Depending on the valuation, we would sell either three or all five,? said Johari, adding that it would be done in a sale-and-leaseback manner, where the buyer will have to first supply the oxygen produced at the plant to Bhushan and the excess production can be sold in the market. In August, the consortium of lenders to Bhushan Steel had decided to conduct a forensic audit of the company and appoint a concurrent auditor to monitor the cash flow on daily basis to ensure their Rs 40,000-crore exposure doesn’t turn bad.
Punjab National Bank, the lead banker for the term loans to the company, had said the lenders had agreed and approved the appointment of an independent engineer to monitor the operations of the company and the projects under ramp up.
According to company data the steelmaker has a net debt of Rs 35,142 crore and around Rs 11,034 crore of debt matures in the next four financial years.
Bankers had sanctioned an additional Rs 6,900 crore in April and the account is classified in the special mention account (SMA) category where the interest is overdue by 0-30 days. The loan sanctioned in April was approved at a joint lenders? forum (JLF) where lead banks SBI and PNB were present.
According to a corporate presentation, the company has strategic investments, through its subsidiary Bhushan Steel (Australia) in Bowen Energy in which it has 100% stake. The total investments till date are $50 million. The presentation says the company has strategic investments in Orissa Sponge & Iron Steel, in which it has 17.12% stake. Bhushan Steel was allocated 325 mt of coal reserves in February 2006 in Patrapara in Odisha.
The firm, which has three plants in Odisha, Maharashtra and Uttar Pradesh, has been faring poorly, reporting a net loss of Rs 141.63 crore for the three months to June. Bhushan Steel has been in the news over the role of its vice-chairman and managing director Neeraj Singal in an alleged case of bribery involving Syndicate Bank. Singal holds a 32.30% stake in the firm while chairman Brij Bhushan Singal owns 20.15%.
The shares of Bhushan Steel rose over 3.5% on Tuesday to end the day’s trade at Rs 111.35 on BSE.