NCLT approves Tata Steel's bid for Bhushan Steel

NCLT approves Tata Steel's bid for Bhushan Steel”

While approving Tata plan, the bench also dismissed the pleas filed by the employees of Bhushan Steel, engineering and construction major L&T and Bhushan Energy.

Tata Steel, will initially subscribe to 72.65% equity share capital of BSL at face value Rs 2 per share, for an aggregate amount of Rs.158.89 crore.

L&T, which is an operational creditor of Bhushan Steel, had sought higher priority in recovery of debt in the resolution process at par with the financial creditors. BNPL will also have the option to convert up to Rs 9,000 crore of the loans into equity shares of Bhushan.

Tata Steel would implement the resolution plan through its step-down subsidiary Bamnipal Steel.

"As per the approved Resolution Plan, BNPL shall be classified as the "promoter" of BSL, and the existing promoters shall be de-classified as "promoters" of BSL for the purposes of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015", the statement added.

On 17 April Tata Steel became the first company to successfully bid for a stressed company which had high NPAs under the IBC law.

"Based on various acquisition scenarios, the flat steel market in India is expected to consolidate further from the current scenario (of 85% being controlled by six players) to anywhere between three to four players", ratings agency CRISIL said.

As it found a new suitor in Tata Steel, the Bhushan Steel scrip was locked at 5 per cent in the upper circuit at ₹23.95 on Tuesday.

Bhushan Steel is one of 12 companies transferred to the bankruptcy court in 2017, over a government move to clear bad loans choking credit at Indian banks. Bhushan Steel owes almost Rs 56,000 crore to its lenders. This acquisition will not only help it to tighten its grip on the country's eastern region but perhaps also help it to snatch the title of "India's largest steel maker" from JSW Steel.

Tata Steel's domestic steel capacity, now at 13 million tonnes, is poised to be augmented by 5.6 million tonnes with the Bhushan Steel acquisition. Now about 38 companies are at different stages of the insolvency process.

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