Published: Wed, May 16, 2018
Electronics | By Kelly Massey

NCLT approves Tata Steel bid for Bhushan Steel

NCLT approves Tata Steel bid for Bhushan Steel

The CoC had selected Tata Steel, which had offered Rs 32,500 crore as upfront payment along with 12.27 per cent equity in BSL to the creditors.

The NCLT also dismissed a plea filed by the employees of Bhushan Steel opposing Tata Steel's bid. "The financial creditors shall receive a total consideration of Rs 35,200 crores for the settlement of the existing financial debt of BSL".

NCLT also dismissed the plea of engineering major L&T, an operational creditor of BSL, which had requested for a higher preference in recovery of debt on par with the financial creditors of the corporate debtor.

Tata Steel would also be infusing Rs9,000cr in the form of an inter-corporate loan, which would have the option to be converted to equity. The NCLT nod will be a shot in the arm for Tata Steel which has been allegedly facing challenges on the ground in its efforts to assert control over BSL's main plant at Dhenkanal in Odisha.

On 17 April Tata Steel became the first company to successfully bid for a stressed company which had high NPAs under the IBC law. This values the equity value of Bhushan Steel at 59.7% discount to the current market capitalization.

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Tata Steel will implement the resolution plan through its wholly-owned subsidiary Bamnipal Steel Limited (BNPL).

Electrosteel owes lenders over ₹13,000 crore, of which about ₹5,000 crore is to State Bank of India alone.

Tata Steel's domestic steel capacity, now at 13 million tonnes, is poised to be augmented by 5.6 million tonnes with the Bhushan Steel acquisition. This acquisition will not only help it to tighten its grip on the country's eastern region but perhaps also help it to snatch the title of "India's largest steel maker" from JSW Steel. NCLT has also directed BSL's ex-management to cooperate with the monitoring agency during the implementation of the resolution plan and granted it liberty to approach it during the process.

In India's steel sector, six companies account for 85% of the flat steel production capacity, of which three are undergoing insolvency proceedings under the Insolvency and Bankruptcy Code.

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