JSW Snaps Up Second Stressed Steel Asset With Bhushan Power Win
An Indian bankruptcy tribunal approved JSW Steel Ltd.’s $2.7 billion bid for Bhushan Power & Steel Ltd.
(Bloomberg) -- An Indian bankruptcy tribunal approved JSW Steel Ltd.’s $2.7 billion bid for Bhushan Power & Steel Ltd., the second major steel asset the mill has bagged under the nation’s new insolvency process.
The National Company Law Tribunal approved the offer Thursday while stating that profits made by Bhushan Power during the insolvency period must be distributed to creditors, in accordance with a ruling by a higher tribunal in a case involving ArcelorMittal-Essar Steel India Ltd.
Bhushan Power will add 3.5 million tons a year of capacity to the Sajjan Jindal-led mill’s operations and establish the Mumbai-based company’s footprint in the eastern part of the country. JSW bid about 197 billion rupees, higher than rivals Tata Steel Ltd. and Liberty House Group.
JSW wasn’t dissuaded in its pursuit of Bhushan Power by a string of accounting frauds, including those totaling about 56 billion reported by Allahabad Bank Ltd. and Punjab National Bank. The sale won’t be affected by criminal proceedings against the former founders of Bhushan Power on the alleged siphoning off of funds, the court said Thursday. The court also appointed a monitoring panel to oversee implementation of JSW’s resolution plan.
Steel Restructure
India’s steel industry has been a major beneficiary of a new bankruptcy process implemented by the government of Prime Minister Narendra Modi. Global players like ArcelorMittal and domestic producers have bid aggressively for stressed assets hoping to gain plants that would immediately contribute to profits.
Apart from JSW, the bankruptcy process has aided the purchase by billionaire Anil Agarwal’s Vedanta Ltd. of Electrosteel Steels Ltd. and boosted Tata Steel Ltd.’s capacity with the acquisition of Bhushan Steel Ltd. ArcelorMittal has won the biggest steel plant under the insolvency process, Essar Steel India Ltd., but is yet to get control due to legal challenges.
Shares of JSW Steel pared gains of as much as 3.5% in Mumbai after the court’s decision and were trading 0.3% higher at 2:32 p.m. local time.
In July 2018, JSW and partner, the Apollo Global Management LLC-backed Aion Capital Partners, bought Monnet Ispat & Energy Ltd. under the new bankruptcy process. JSW plans to look for a partner for Bhushan Power, as it did for Monnet, once the deal is completed. Bhushan Power owes financial creditors 471 billion rupees.
Adding Bhushan Power would allow JSW to reach its goal of increasing capacity to 45 million tons in India and have overseas capacity of 10 million tons by 2031.
To contact the reporters on this story: Upmanyu Trivedi in New Delhi at utrivedi2@bloomberg.net;Swansy Afonso in Mumbai at safonso2@bloomberg.net
To contact the editors responsible for this story: Phoebe Sedgman at psedgman2@bloomberg.net, Alpana Sarma, Ramsey Al-Rikabi
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