With eye on Bhushan Power, JSW Steel may raise funds via rights

Sajjan Jindal-led JSW Steel has said it will consider raising additional long-term resources, including issuance of equity shares or other securities, through a rights issue at its board meet next week.

The promoter and promoter group hold 42.32 per cent stake in the company, while 57.12 per cent is held by the public.

Employee trust and non promoter-non public hold 0.56 per cent each.

"At its meeting on October 25, the board would be considering raising of additional long-term resources, including but not limited to, issuance of equity shares or other securities by way of a rights issue subject to regulatory approvals," JSW Steel said in a regulatory filing Saturday.

The board will also finalise the un-audited standalone and consolidated financial results of the company for the quarter and half-year ended September 2018 and the payment of dividend at the contracted rate on the 10 per cent cumulative redeemable preference shares of the company for the financial year 2018-19, up to the date of its final redemption, it added.

According to a banking source, "JSW Steel is exploring differentiated financing options, including joint control model, to fund its acquisition of stressed assets of Bhushan Power and Steel."

This assumes significance as JSW Steel's Rs 197 billion offer for debt-laden Bhushan Power and Steel (BPSL) has been backed by around 90 per cent of lenders.

Under the joint control model, a special purpose vehicle (SPV) will be set up and the acquired stressed assets will rest with the SPV.

The joint control model will insulate debt impact of yet to be acquired stressed assets of these two firms on JSW Steel financials.

If acquired, JSW Steel is exploring to merge the stressed assets of both companies into its books post turnaround of the stressed assets.

Bhushan Power is among the 12 non-performing accounts referred by the RBI for NCLT proceedings and owes about Rs 450 billion to its lenders.

JSW Steel had earlier teamed up with NuMetal Mauritius to place a Rs 370-billion offer for Essar Steel in the second round of bidding.

However, the Essar Steel's committee of creditors Friday picked ArcelorMittal as the highest bidder under the IBC.

JSW Steel, with a capacity of 18 million tonnes per annum (mtpa), is engaged in manufacturing of flat and long products, namely hot rolled coils, cold rolled coils, galvanised products, galvalume products, colour coated products, auto grade/white goods grade flat products, bars and rods.