6 September 2019: Sajjan Jindal-promoted JSW Steel has finally won Bhushan Power and Steel (BPSL) with its Rs 19,700-crore bid having been accepted by the National Company Law Tribunal (NCLT). At this price, bankers will be taking a near 60% haircut. The appellate tribunal on Thursday okayed the bid which would see financial creditors get Rs 19,350 crore while operational creditors will get `350 crore against their admitted claims of Rs 733.76 crore, a recovery of nearly 48%.
The acquisition of BPSL will make JSW Steel India’s biggest steelmaker with a capacity of over 22 million tonne.
BPSL has a capacity of 3.1 million tonne per annum (mtpa). JSW Steel has already taken over another insolvent firm — Monnet Ispat — through the Insolvency and Bankruptcy Code (IBC) route; Monnet has a steel-making capacity of 1.1 mtpa.
“The resolution plan of JSW, H1 resolution applicant, is accepted,” the two-member NCLT bench, headed by its president MM Kumar, said in its 138-page order. The bench also overruled objections raised by erstwhile promoters of the company as well as its operational creditors, both of which were against JSW Steel’s resolution plan.
The NCLT’s principal bench had on July 26, 2017, admitted the insolvency plea of Punjab National Bank against the company. A clutch of 34 financial creditors claimed `47,303 crore from the company, as on January 3, 2019, of which, the resolution professional (RP) admitted claims worth Rs 47,158 crore. Operational creditors, numbering 1,778, claimed `2,320 crore from BPSL.
“JSW is to incorporate or identify a wholly-owned subsidiary and to infuse equity of `8,550 crore into a special purpose vehicle (SPV), which is to be done in accordance with the provisions of the resolution plan and is to merge with the corporate debtor on the effective date,” JSW Steel’s council had informed the NCLT earlier.
The CIRP for BPSL has seen many twists and turns. Though late-entrant Liberty House was in the reckoning for BPSL, the race was primarily one between JSW Steel and Tata Steel. Lenders had on July 9, 2018 selected Tata Steel as the H1 bidder and JSW Steel as the H2 bidder for BPSL.
However, on July 26, 2018 the CoC allowed JSW Steel to submit a revised bid for the steelmaker. Tata Steel challenged the CoC’s decision in NCLAT on July 30, 2018. On August 1, 2018 NCLAT had again allowed submission of revised bids by all three bidders, including the UK-based Liberty House. Following this, on August 13, 2018 JSW Steel further improved its financial bid and chosen as the most preferred bidder, ahead of Tata Steel, for BPSL by the CoC on July 14.
While the Tatas had consistently opposed CoC’s permission for a revised bid, JSW Steel had questioned its objections, saying a financial bid can always be improved upon till the time the bids are voted on. The erstwhile promoters also made a last-minute offer of repaying back financial creditors in full. Sanjay Singal had offered to pay the financial creditors in full and take the company out the CIRP, under section 12 A of the IBC, by converting their entire debt into cumulative redeemable preference shares, payable over 17 years.