JSW Steel, Tata Steel Battle It Out For Bhushan Power & Steel
JSW Steel’s bid for Bhushan Power & Steel values the company at Rs 13,000 crore.
JSW Steel Ltd. and Tata Steel Ltd. have emerged as the final bidders for Bhushan Power & Steel Ltd. which is currently undergoing resolution under the Insolvency and Bankruptcy Code.
JSW Steel’s bid values the company at Rs 13,000 crore, three people with knowledge of the matter told BloombergQuint on the condition of anonymity. Bhushan Power & Steel’s liquidation value currently stands at Rs 10,000 crore and the fair value arrived at through an independent evaluator was Rs 25,000 crore, they confirmed.
The company had received 13 expressions of interest but only two bids were finally submitted, the people said. These bids were opened for a select group of lenders, their lawyers and the insolvency resolution professional appointed in the matter to ensure that they are fully compliant with the requirements set by lenders, they added.
Lenders will look at parameters such as upfront cash recovery, deferred repayment rate and equity infusion for operations mentioned in each bid, the first of the three people quoted above said.
Through these parameters, lenders will determine the highest bidder and negotiate further. The committee of creditors will only negotiate with the highest bidder, lenders had agreed in a meeting at the Indian Banks’ Association earlier this month.
The beleaguered steel company owes more than Rs 47,000 crore, according to information on its website. Mahender Khandelwal, the resolution professional appointed in Bhushan Power & Steel, JSW Steel and Tata Steel did not respond to queries from BloombergQuint.
The company produces flat and long steel products and has plants at Chandigarh, Derabassi, Kolkata and Odisha, according to the information available on its website. Its total production capacity stands at 3.5 million tonne per annum.
Bhushan Power & Steel is one of the 12 large companies which were referred to the National Company Law Tribunal in June 2017, after the Reserve Bank of India directed banks to do so. These 12 companies represented about 25 percent of the banking system’s gross non-performing assets as on March 2016, the regulator had then said.
Steel assets among these companies have found takers as domestic and international steel companies try to expand their capacity. Bhushan Steel Ltd has received two final bids, one from Tata Steel and the other from a special purpose vehicle led by JSW Steel, BloombergQuint had reported earlier this week. Essar Steel Ltd, another large steel asset listed under the 12 companies is awaiting final bids.