MUMBAI: Tata Steel Ltd on Friday said it has completed the acquisition of 73 per cent stake in Bhushan Steel Ltd (BSL), making it the first acquisition out of the 12 large corporate accounts that the RBI referred for insolvency and resolution last June.
The Board of Bhushan Steel approved the sale of 74.99 shares to Tata Steel’s wholly-owned subsidiary Bamnipal Steel Ltd for nearly Rs 159 crore, the company said in a disclosure on BSE. It added that the lenders also received 7.25 crore equity shares worth Rs 2 each, after conversion of Rs 14.5 crore-worth loans in the company.
The settlement also includes an amount equivalent to Rs 35,200 crore towards financial creditors of BSL as per the terms of the resolution plan submitted by Tata Steel Ltd and as approved by the NCLT. BSL had dues worth Rs 56,000 crore and the Rs 35,200 crore settlement translates to a haircut of roughly 37 per cent for lenders.
As part of the transaction, Bhushan Steel has also appointed three Tata Steel veterans — Anand Sen, Rajeev Singhal, and Dibyendu Datta — on its Board.Meanwhile, Neeraj Singhal, BSL’s promoter, moved the NCLT objecting to Tata Steel’s takeover. The tribunal agreed to hear, but refused to grant a stay on the proceedings. The next hearing in the matter is posted for Monday.
BSL has a crude steel capacity of about 5.6 million tonnes along with downstream facilities of cold rolled products of about 2 mtpa. The company has its upstream facilities in Odisha and downstream facilities in Maharashtra and Uttar Pradesh. Its turnover stood at Rs 15,099 crore in the financial year 2016-17.
The acquisition provides an inorganic growth opportunity to Tata Steel to grow in its existing business in flat products and leverage operating synergies.
BSL is currently the fifth largest integrated steel plant in India with a crude steel capacity of about 5.6 million tonnes along with downstream facilities of cold rolled products of about 2 mtpa. It caters majorly to the auto industry and consumer durable manufacturers.It was admitted under the Corporate Insolvency Resolution process on July 26, 2017, as per the Insolvency and Bankruptcy Code 2016.The NCLT approved the resolution plan on May 15, 2018.
How the settlement panned out
● Bhushan Steel Board approved sale of 74.99 shares to Tata Steel subsidiary Bamnipal Steel Ltd for nearly Rs 159 crore
● Lenders received 7.25 crore equity shares worth Rs 2 each, after conversion of Rs 14.5 crore-worth of loans