The committee of creditors of Bhushan Power and Steel Ltd have issued a letter of intent to India’s largest private steelmaker JSW Steel Ltd, thus approving the latter’s resolution plan for the distressed steel mill. JSW Steel will now pay Rs19,700 crore ($6.28 billion) in upfront cash to Bhushan Power and Steel’s lenders and infuse ₹350 crore in the steelmaker to revive it.
Bhushan Power and Steel is the second insolvent firm acquired by Sajjan Jindal-led JSW Steel after Monnet Ispat and Energy Ltd last year.
Bhushan Power and Steel operates a 3.5 million tonne (mt) steel plant in Odisha. Under its earlier promoter Sanjay Singhal, the company had accumulated debt of more than₹47,000 crore. It was one of firms in Reserve Bank of India’s “dirty dozen” list of NPA accounts referred to the bankruptcy courts under the Insolvency and Bankruptcy Code (IBC).
In the initial round of bidding, Bhushan Power and Steel received bids of ₹11,000 crore from JSW Steel, ₹17,000 crore from Tata Steel Ltd and ₹18,500 crore from Liberty House. JSW Steel subsequently revised its bid to ₹19,700 crore.
Tata Steel had challenged the validity of Liberty House’s and JSW Steel’s bid in court, which it lost. Subsequently, on Monday, JSW Steel received the letter of intent from lenders. Now, the resolution plan needs to be approved by NCLT Delhi before JSW Steel can complete the acquisition, the company said in a filing to the stock exchanges.
JSW Steel had in the past said that if it were to win Bhushan Power and Steel, the buy would be partly funded by an equity rights issue of ₹5,000 crore and a new investor could also be brought in.
This article was first published on livemint.com.