Lenders of insolvent Bhushan Power pick Rs 197-billion bid of JSW Steel

Lenders of insolvent Bhushan Power & Steel (BPSL) have chosen the Rs 197-billion bid of JSW Steel. The committee of creditors (CoC) voted by a 66.6 per cent majority in its favour.

Tata Steel and Liberty House were also in the race to acquire the company after the National Company Law Appellate Tribunal (NCLAT) on August 6 permitted the three to file additional unconditional “resolution plans”.

The Tatas had bid about Rs 170 billion. (They have already won the race of Bhushan Steel.) Liberty House offered to enter the race at a late stage, but this was challenged by Tata Steel.

Since JSW Steel’s bid got the bare minimum number of votes, now the National Company Law Tribunal will have to approve the resolution plan under the regulations of the Insolvency and Bankruptcy Code.

The bidders were directed by the NCLAT to improve their offer, provided basic parameters of the “resolution plans” already submitted by them were unchanged.
 

A source close to the development said the bidders who lost the race are likely to challenge the CoC decision in courts.

The corporate insolvency and resolution process of BPSL was a long-drawn-out process, having been admitted for insolvency proceedings in July 2017. It was among the first 12 companies to be referred to the IBC.

The company owes lenders about Rs 470 billion. Therefore, with JSW Steel’s offer, lenders will take a haircut of 58 per cent.

Initially, JSW Steel had made an offer of Rs 110 billion, which was revised to Rs 180 billion. It has also offered to pay Rs 3.5 billion to BPSL’s operational creditors.

Sources said JSW Steel stated its intention to infuse an additional Rs 70 billion for any future requirements.

This is the second company that Sajjan Jindal has acquired through the IBC process, the first being Monnet Ispat & Energy.

The insolvency process for that was concluded in July this year. JSW Steel and AION Investments offered to pay lenders Rs 38.75 billion in additional to Rs 10 billion in equity capital infusion for the debt-ridden company. Monnet’s outstanding debt stood at Rs 110 billion.