The National Company Law Tribunal (NCLT) on Tuesday accorded approval to Tata Steel’s resolution plan for taking over Bhushan Steel, dismissing a plea filed by the employees of the latter opposing the former’s bid, and also imposed a fine of `1 lakh, reports fe Bureau in New Delhi. The tribunal also dismissed the plea of engineering and construction major Larsen & Toubro, which had sought higher priority in recovery of loan and imposed a fine of Rs 1 lakh on it too. A plea by Bhushan Energy to continue its power purchase agreement with Bhushan Steel was also rejected.
The National Company Law Tribunal (NCLT) on Tuesday approved Tata Steel’s resolution plan for taking over Bhushan Steel. It dismissed a plea filed by the employees of the troubled company opposing Tata Steel’s bid and imposed a fine of Rs 1 lakh on them. The tribunal also dismissed Larsen and Toubro’s plea which had sought a higher priority in recovery of loan and imposed a fine of Rs 1 lakh on it also. A plea by Bhushan Energy to continue its power purchase agreement with Bhushan Steel was also rejected.
Since Bhushan Steel has a 5.6 mtpa capacity steel plant, the development will catapult Tata Steel’s total domestic capacity to 18.6 mtpa, a tad higher than JSW Steel and Steel Authority of India’s 18 mtpa each.
Tata Steel has offered to pay Rs 35,200 crore to the financial creditors and Rs 1,200 crore to the operational creditors of Bhushan Steel, which owes Rs 56,080 crore to its financial creditors and Rs 1,332 crore to operational creditors. Tata Steel will also offer a 12.27% equity to the financial creditors. This would go up to 13.43% in the event Sebi does not allow the erstwhile existing promoter group shareholding to be counted towards public shareholding.
Tata Steel has also offered to pay Rs 0.56 crore towards employees’ dues. It will retain all employees on-roll. The overall plan retrieves 67% of the NPAs. As much as 99.8% of the lenders approved Tata Steel’s resolution plan. The Competition Commission of India has already approved the proposed acquisition.
Bhushan Steel was admitted by the insolvency court on July 26 last year under section 7 of the Insolvency and Bankruptcy Code (IBC) on SBI’s plea. Though a dozen firms had initially evinced interest in the firm, finally only Tata Steel and JSW Steel submitted their resolution plan. Sources said JSW Steel’s bid was way lower than that of Tata Steel’s.
As on March 2018, Bhushan Steel promoters had a 43.9% shareholding while the remaining was with the public.