JSW Steel, Tata Steel and the UK-based Liberty House are understood to have offered between Rs 17,000 crore and Rs 19,700 crore for the debt-hit Bhushan Power and Steel (BPSL).
JSW Steel is believed to have agreed to pay Rs 19,350 crore to BPSL’s financial creditors plus Rs 350 crore to the operational creditors against their admitted claims of Rs 700 crore. BPSL owed lenders, led by Punjab National Bank, Rs 47,000 crore.
Sources present at the committee of creditors (CoC) meeting held on Tuesday said Tata Steel did not revise its original offer of Rs 16,500 crore for financial creditors though it has said it would pay operational creditors Rs 500 crore.
Liberty House’s proposal to pay Rs 18,500 crore to financial creditors, sources said, was exclusive of the commitment to pay Rs 350 crore to operational creditors.
If JSW Steel wins BPSL, the additional 3.1 million tonnes per annum steel-making capacity will catapult it to the position of India’s largest steel company with a capacity of over 22 million tonnes per annum (mtpa), outpacing Tata Steel. JSW Steel has already taken over another insolvent firm, Monnet Ispat, through the Insolvency and Bankruptcy Code route. Monnet has an annual capacity of 1.1 mtpa.
Once the CoC identifies the best resolution plan, the resolution professional will wait for the National Company Law Appellate Tribunal’s direction before submitting the same to the National Company Law Tribunal (NCLT).
On August 1, the NCLAT had directed the CoC to decide on the most appropriate resolution plan. The CoC was asked to go through the “viability, feasibility and matrix of the resolution plans taking into consideration revised financial offers… However, the decision is to be kept in a sealed cover,” until the appellate tribunal passes an order on whether the late bid submitted by Liberty House initially is valid or not.
JSW Steel’s offer to pay out 41% of the lenders’ dues is the second best offers by the acquirer firms through the insolvency process. Tata Steel’s offer to Bhushan Steel’s lenders involved a haircut of just 32%. 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 a 65% haircut. Vedanta’s bid for Electrosteel Steels involved a 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 BPSL’s resolution process will take the tally to six among the “dirty dozen” identified by the Reserve Bank of India last year.