After one-and-a-half years of waiting since the takeover offer, JSW Steel is looking to close the Rs 19,350 crore acquisition of bankrupt Bhushan Power and Steel Ltd (BPSL) by March 25. According to banking sources, the company is ready with the funds to make payments to the financial creditors of BPSL and it is expected to be completed by March 25.
However, the creditors will have to keep the payment in the escrow account as a case is pending against BPSL's former promoters in the Supreme Court. The SC had recently ordered the creditors to return the payment to JSW Steel in case the ruling in the pending case goes in favour of the investigating agency, Enforcement Directorate (ED), to attach the assets of BPSL.
When contacted, a senior JSW Steel official said they are constantly in touch with the lenders of BPSL and are not in a position to comment now.
In the insolvency and bankruptcy proceedings, JSW Steel had proposed to repay Rs 19,350 crore to the BPSL lenders against their claims of Rs 48,000 crore. The National Company Law Tribunal (NCLT) cleared JSW's resolution plan in September 2019, but the case got stuck in courts as the ED had attached BPSL's properties.
The appellate tribunal had granted immunity to JSW Steel from any prosecution emanating from offences of the erstwhile promoters under Section 32A of the Insolvency & Bankruptcy Code (IBC) last year. However, the ED moved the apex court, arguing the NCLAT had no jurisdiction to unfreeze and approve the sale of an asset attached by the investigating agency. The ED had attached assets worth over Rs 4,025 crore, with its money laundering probe linked to an alleged bank loan fraud by the company's former owners.
SBI is the largest lender to BPSL, followed by PNB, ACRE, Canara Bank, among others.
The acquisition of 3.5-million-tonne BPSL may cost just around Rs 6,000 crore on the books of JSW Steel. The lead bidder JSW Steel plans to keep it as a strategic investment, which it will not consolidate by merging with the flagship company. JSW Steel is expected to fund 70 per cent of the acquisition value through debts on the books of BPSL.
JSW Steel is also looking to rope in a strategic investor to divest a 49 per cent stake in bankrupt BPSL to reduce the financial burden further. The strategic investor's equity contribution will further reduce the liability of the steelmaker.