7 February 2019: Lenders to Bhushan Power and Steel (BPSL) are likely to reject the last-minute offer made by the debt-ridden firm’s erstwhile owner Sanjay Singal of repaying financial creditors in full. JSW Steel has already been chosen by the lenders as the most preferred bidders for BPSL. The lenders are scheduled to meet on February 8 to decide on the matter.
Singal has offered to pay the financial creditors in full and take the company out of the corporate insolvency resolution process (CIRP), under section 12 A of the Insolvency and Bankruptcy Code (IBC), by converting their entire debt into cumulative redeemable preference shares, payable over 17 years.
Sources said both SBI and PNB, having around 20% and 9% shares, respectively, in the committee of creditors (CoC), may oppose Singal’s offer at the Friday meeting. A proposal to withdraw an application under Section 7 or Section 9 or Section 10 of the IBC, on an application made by the applicant, has to have 90% of voting share of the CoC.
A clutch of 34 financial creditors have claimed Rs 47,303 crore from the company as on January 3, 2019, of which, the RP has admitted claims worth Rs 47,150 crore. Singal, sources said, has also offered to pay the operational creditors of the company their due in 5-6 years.
Sources also said that as per the National Company Law Appellate Tribunal’s February 4 order, BPSL’s resolution professional Mehender Kahndelwal would submit JSW Steel’s resolution plan either on Friday (February 8) or Monday (February 11).
On February 4, NCLAT paved the way for JSW Steel to take over BPSL, dismissing Tata Steel’s objections that lenders had given the Sajjan Jindal-led firm undue chances to revise its bid even after declaring Tata Steel as the preferred bidder.
BPSL’s financial creditors have in August last year approved JSW Steel’s resolution plan that involves a payment of Rs 19,350 crore to the financial creditors, implying a near 60% haircut for lenders. Apart from this, the Sajan-Jindal promoted company has offered to pay operational creditors a sum of Rs 350 crore against their admitted claims of Rs 733 crore. In its order, NCLAT has also directed the RP to submit the best plan to the NCLT immediately and asked NCLT to pass an order after evaluating the bid and keeping in mind the interests of operational creditors.