Tata Steel Ltd. today completed the acquisition of 73 percent stake in Bhushan Steel Ltd. as part of its resolution plan under the Insolvency and Bankruptcy Code.
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 its filing with the stock exchanges. As part of this transaction, Bhushan Steel has also appointed three Tata Steel veterans – Anand Sen, Rajeev Singhal and Dibyendu Dutta – on its board.
Lenders to Bhushan Steel also received 7.25 crore equity shares worth Rs 2 each, after conversion of Rs 14.5 crore worth loans in the company, the exchange notification said.
With this acquisition, Bhushan Steel has become the first of the 12 large corporate accounts which were referred for insolvency action in June 2017 by lenders, after the Reserve Bank of India directed them to do so. Tata Steel’s resolution plan received a nod from the National Company Law Tribunal on Tuesday.
Lenders to Bhushan Steel, led by State Bank of India, have received Rs 35,200 crore to settle their dues worth over Rs 56,000 crore, two people aware of the development said on the condition of anonymity. This works out to a 37 percent haircut for the financial creditors.
Neeraj Singhal, promoter for Bhushan Steel, has filed an objection at the National Company Law Appellate Tribunal objecting to Tata Steel’s takeover. On Thursday, the appellate tribunal agreed to hear Singhal’s plea but it did not grant a stay on the proceedings. The next hearing in the matter is posted for Monday.