JSW Steel pays Rs 19,350 cr to financial creditors of Bhushan Power & Steel

Lenders would stand to realise 41% on claims of Rs 47,157.99 cr

JSW Steel group on Friday closed the Rs 19,350-crore transaction with lend­ers to acquire Bhushan Power & Steel (BPSL), bringing down the curtain on a corporate insolvency resolution process (CIRP) that has stretched over three-and-a-half years.
 
The transaction was funded through a mix of equity and debt. As part of the payment, a sum of Rs 8,614 crore in Piombino Steel (PSL) was arranged through a mix of equity, optionally convertible instruments and debt. Of this, Rs 8,550 crore was invested in a special purpose vehicle (SPV), Makler, the bidding company. The remaining Rs 10,800 crore was funded through debt.
 
JSW informed the stock exchanges that following the implementation of the resolution plan, which included payment of Rs 19,350 crore to financial creditors of BPSL and the merger of the SPV, PSL holds 100 per cent equity shares in BPSL. Seshagiri Rao, joint managing director and chief financial officer, JSW Steel, said the company took charge of the asset on Friday.
 
In a letter to BPSL employees, Sajjan Jindal, chairman of JSW group, said BPSL was the largest acquisition in his firm’s history. “This acquisition not only aligns with our core business and purpose but also establishes our presence and accelerates our growth vision in eastern India,” he said. “I am aware how difficult it is to build a greenfield steel plant of this size and this asset is indeed a testament to your tireless efforts,” he further said.
 
The deal concluded even as litigations are pending before the Supreme Court because the firm and the lenders wanted to close it before March 31.
 
The lenders, who waited for a year-and-a-half after the National Company Law Tribunal (NCLT) approved resolution plan for payment, would stand to realise 41.03 per cent on claims of Rs 47,157.99 crore. 

 
The top creditors are State Bank of India with an exposure of Rs 9,825 crore, PNB with exposure of Rs 7,355 crore (including claims of Oriental Bank of Commerce and United Bank of India after the merger), Can­ara Bank (Rs 4,018 crore, including claims of Syndicate Bank), Union Bank (Rs 3,497 crore, including claims of Andhra Bank and Corporation Bank), and Asset Care & Reconstruction Enterprise with exposure of Rs 5,275 crore. SBI is expected to recover around Rs 4,000 crore. 
 
BPSL was among the first 12 big-ticket non-performing assets (NPAs) mandated for resolution by the Reserve Bank of India (RBI) under the IBC. To close the transaction, most lenders voted in favour of a proposal on March 5 to accept payment ac­c­­ording to JSW Steel’s resolution plan with an undertaking to refund the amount in the event the Supreme Court delivers an adverse order.
 
The deal would provide for 47.69 per cent of Rs 733.76 crore claims of operational creditors. The 2.5-million tonne (MT) BPSL plant in Jharsuguda, Odisha, would put JSW Steel, which has a capacity of 18 MT, ahead of top steelmaker Tata Steel (20.6 MT), along with the 1 MT Monnet Ispat & Energy (jointly acquired with AION as majority partner). It also gives JSW a foothold in the East.  
 
Jindal in his tweet said, “Very proud that with the acquisition of Bhushan Po­wer and Steel, we had made our entry in Odisha-East India and are now the country’s leading steel maker.” Rao said JSW Steel plans to commission its 5 MT expansion at Dolvi, Maha­rashtra, before June 2022. That would increase its capacity to 26.5 MT.