Tata Steel completes acquisition of bankrupt Bhushan Steel

19 May 2018


Tata Steel said  on Friday it has completed the acquisition of a 72.7 per cent stake in bankrupt Bhushan Steel Ltd (BSL) for Rs35,200 crore, making the first acquisition of a stressed asset under the new Insolvency and Bankruptcy Code.

Besides the Rs35,233 crore that Bamnipal Steel Ltd (BNPL), a unit of Tata Steel, is paying Bhushan Steel’s creditor banks, the company will also pay Bhushan Steel’s operational creditors, including vendors, another Rs1,200 crore over a 12-month period.
“The admitted CIRP cost and employee dues have been paid as required under IBC. Settlement of the amounts equivalent to Rs35,200 crore towards financial creditors of BSL is being undertaken as per the terms of the resolution plan and corresponding transaction documents,” the company said.
BNPL will raise a bridge loan of Rs16,500 crore to help fund the acquisition, while Tata Steel is investing the remainder in the unit, Bamnipal Steel.
“The investment from BNPL in BSL has been done through a combination of equity of Rs158 crore and inter-corporate loan of Rs34,963 crore . Additionally, Rs100 crore has been paid by BNPL to the financial creditors of BSL as consideration for novation of remaining financial debt of BSL.
“The acquisition is being financed through a combination of external bridge loan of Rs16,500 crore availed by BNPL and balance amount through investment by Tata Steel in BNPL. The bridge loan availed by BNPL is expected to be replaced by debt raised at BSL over time,” it said.
The company has received all the approvals and appointed members to Bhushan Steel’s board, Tata Steel said in a statement.
Tata Steel will absorb all the employees of the company as per the resolution plan submitted and approved by the committee of creditors.
Tata Steel also plans to keep the company listed for the next 2-3 years.
“BNPL has successfully completed the acquisition of controlling stake of 72.65 per cent in BSL in accordance with the approved resolution plan under the Corporate Insolvency Resolution Process (CIRP) of the Insolvency and Bankruptcy Code 2016 (IBC) which has been managed by Vijaykumar V lyer, Partner, Deloitte Touche Tohmatsu India LLP, in his capacity as the resolution professional,” Tata Steel said in a statement.
Incorporated in 1983, Bhushan Steel is the country’s fifth largest integrated steel plant with a crude steel capacity of about 5.6 million tonnes per annum besides downstream facilities of cold rolled products of about 2 mtpa. It caters to major auto industry and consumer durable manufacturers through its upstream facilities in Meramandali, Odisha and downstream facilities in Khopoli, Maharashtra and Sahibabad, Uttar Pradesh.

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