Its advantage JSW in a three-cornered fight for Bhushan Power and Steel

By: | Published: October 18, 2018 5:20 AM

Lenders to the bankrupt Bhushan Power and Steel are understood to have backed the revised offer of Sajjan Jindal-led JSW Steel, which means that rival Tata Steel and UK’s Liberty House have lost out in the race to acquire the firm.

steel sector, steel industry, jswJSW Steel’s offer to pay out 41% of the lenders’ dues is the second best offer by the acquirer firms through the insolvency process.

Lenders to the bankrupt Bhushan Power and Steel are understood to have backed the revised offer of Sajjan Jindal-led JSW Steel, which means that rival Tata Steel and UK’s Liberty House have lost out in the race to acquire the firm.

Sources said that a majority of lenders have voted in favour of JSW Steel’s bid, which has offered to pay the lenders Rs 19,350 crore, an additional Rs 350 crore to the operational creditors against their admitted claims of Rs 700 crore. Bhushan Power owed lenders, led by Punjab National Bank, Rs 47,000 crore.

Sources said that the resolution professional of Bhushan Power and Steel, Mahender Khandelwal, will now take the results of the voting to the National Company Law Appellate Tribunal, before which is the appeal of Tata Steel, which was the highest bidder initially.

Tata Steel, which was initially ahead in the race, had not revised its original offer of Rs 16,500 crore for the financial creditor, though it had said it would pay operational creditors Rs 500 crore. Liberty House’s proposal to pay Rs 18,500 crore to the financial creditors, according to sources, was exclusive of the commitment to pay Rs 350 crore to the operational creditors.

JSW Steel’s initial offer was Rs 11,500 crore.

If JSW Steel wins Bhushan Power and Steel, the additional 3.1 million tonnes per annum steelmaking capacity will catapult it to the position of the country’s largest steel company, outpacing Tata Steel, which has a capacity of over 22 million tonnes per annum (mtpa). JSW Steel has already taken over another insolvent firm, Monnet Ispat, through the Insolvency and Bankruptcy Code (IBC) route. Monnet has an annual capacity of 1.1 mtpa.

On August 1, the NCLAT had directed the committee of creditors to decide on the most appropriate resolution plan. The CoC was asked to go through the “feasibility and matrix of the resolution plans taking into consideration revised financial offers…”

JSW Steel’s offer to pay out 41% of the lenders’ dues is the second best offer by the acquirer firms through the insolvency process. Tata Steel’s offer to Bhushan Steel’s lenders involved just 32% haircut.
Lenders to Adhunik Metaliks had to take the highest 92% haircut followed by 75% by the lenders of Monnet Ispat. Liberty House’s resolution plan for Amtek Auto involved 65% hair-cut. Vedanta’s bid had Electrosteel Steels involved 60% haircut.

The corporate insolvency resolution process has been successful for five large companies — Bhushan Steel, Electrosteel Steels, Monnet Ispat, Adhunik Metaliks and Amtek Auto.The approval of Bhushan Power and Steel’s resolution process will take the tally to six among the “dozen”identified by the Reserve Bank of India last year.

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