In early May, SteelOrbis reported on the likely acquisition of Bhushan Power and Steel by Liberty House. In a surprising turn of events, the National Company Law Tribunal (NCLT) has approved Tata Steel’s bid for Bhushan Steel (BSL). The committee of creditors also approved Tata Steel’s offer of Rs 32,500 crore (US$4.76 billion) deal along with a 12.27 percent equity in Bhushan Steel.
Tata Steel recently released a statement that per the terms of approved Resolution Plan, Bamnipal Steel Limited (BNPL), a wholly-owned subsidiary of Tata Steel, will initially subscribe to 72.65 percent equity share capital of BSL at face value (approximately Rs 2 per share), for an aggregate amount of Rs158.89 crore (US$23.29 million). The Rs 35,200 crore (US$4.76 billion) for the settlement of the existing financial debt of BSL will be funded through a combination of equity and inter-corporate loans, of which up to Rs 9,000 crore (US$1.32 billion) loans have an option of conversion into equity shares of BSL. The Resolution Plan also requires financial creditors to invoke pledge on existing equity shares of BSL. Bhushan Steel owes nearly Rs 56,000 crore ($8.21 billion) to its lenders.
Tata Steel’s domestic steel capacity, now at 13 million mt, is poised to be augmented by 5.6 million mt with the BSL acquisition. BSL makes flat products like hot and cold rolled coil and galvanized sheets. BSL’s main plant is in Dhenkanal in the state of Odisha.
Following the NCLT approval, the only remaining factor is the forthcoming decision from the Competition Commission of India (CCI).