Title: JSW Steel set to acquire Bhushan Power
JSW SteelNSE 0.79 % Tuesday went procedurally a step closer to acquiring an asset in bankruptcy-induced ownership change after the administrator overseeing the sale of Bhushan Power and Steel issued a letter of intent (LoI) in favour of India’s biggest maker of the alloy.
JSW Steel had made a Rs 19,650-crore offer, which included upfront payment of Rs 19,300 crore, with another Rs 350 crore earmarked for operational creditors, according to sources close to the development. After JSW Steel accepts the LoI, the resolution professional will submit JSW Steel’s plan to the National Company Law Tribunal (NCLT) for its approval.
“JSW has been issued the LoI. The resolution professional will file the matter before NCLT for its approval on Wednesday," a senior industry executive with direct knowledge of the matter told ET.
Mahender Kumar Khandelwal, the resolution professional overseeing the sale, declined to comment on the matter.
In this resolution case, JSW Steel came from behind and bettered its initial bid to trump Tata Steel's Rs 17,000-crore offer. The Sanjay Singal-owned company has Rs 47,000 crore of debt. While JSW had earlier acquired the one million tonne Monnet Ispat for Rs 2,875 crore jointly with Aion Investments, Bhushan Power and Steel is bigger with a 3.5 million tonne capacity.
If JSW Steel is successful, this acquisition would also compensate for JSW Steel’s failed bid for Bhushan SteelNSE -1.58 % (now renamed Tata Steel BSL), which went to the Tatas for Rs 35,200 crore.
“However, JSW Steel can hope to bag Bhushan Power and Steel only after its resolution plan is approved by the NCLT. It also has to contend with some more litigation before clinching the deal since promoter Sanjay Singal has also approached the court,” a top source said, adding that the transaction is likely to be completed by March 31.
Significantly, if JSW wins Bhushan Power and Steel, it will secure a much needed beachhead in India’s mineral-rich east, where its nearest rival Tata Steel has a strong production footprint across Odisha (Kalingangar and Tata Steel BSL and Jharkhand (Jamshedpur).
Earlier this month, the decks were cleared for JSW’s acquisition of the stressed asset when a court of appeals turned down a plea by Tata Steel to consider its bid for the bankrupt steel firm as the only legitimate offer and disregard competing, belated requests.