Tata Steel on Friday said it has accepted the letter of intent for the sale of Bhushan Steel for an undisclosed amount. According to industry sources, the Tata group firm is likely to pay Rs 352 billion in cash for the deal.
However, there are likely to be hiccups since the National Company Law Tribunal (NCLT) has fixed April 3 as the date for deciding on Larsen & Toubro’s (L&T’s) petition, which had challenged the process, saying its dues of Rs 9.62 billion should be cleared first.
The Committee of Creditors had declared Tata Steel the successful bidder for Bhushan Steel on Thursday, subject to regulatory approvals, including from the NCLT and the Competition Commission of India.
“Tata Steel has accepted the letter of intent for Bhushan Steel under the Corporate Insolvency Resolution Process of the Insolvency and Bankruptcy Code 2016,” the company said in a statement.
This would be one of the biggest debt resolutions for banks as Bhushan Steel's debt stood at Rs 499 billion in 2016-17. The other bidder, JSW Steel, is understood to have offered Rs 297 billion.
However, there could be some delay in the approval due to the litigation in the NCLT. A day after Tata Steel announced it had emerged the highest bidder, L&T on March 8 petitioned the NCLT, alleging that Bhushan Steel had defaulted on payments of Rs 9.62 billion for constructing its Angul factory in Odisha. L&T had claimed the amount by filing a prescribed form with resolution professional Vijay Kumar Iyer of Deloitte Touche Tohmatsu in August.
During Friday’s hearing, L&T argued it should not be treated as an operational creditor of Bhushan Steel. The company’s counsel said it should get the status of a secured creditor. Bhushan Steel had filed a reply with the tribunal following the NCLT order of March 8. L&T will now file rejoinders to the reply.
Neeraj Singhal-promoted Bhushan Steel had received resolution plans from JSW Steel and employees of Bhushan Steel. The Odisha-based company has a 5.6-million-tonne-per-annum (mtpa) capacity. With its acquisition, Tata Steel’s capacity will cross 18 mtpa from the current 13 mtpa.
In its petition, L&T said the plant and machinery supplied to Bhushan Steel was “a property attached to the earth” under Section 3 of the Transfer of Property Act, and hence it came under the ambit of immovable property. Since “works evaluated at Rs 9.62 billion remained outstanding from the respondent (Bhushan Steel) due to its non-performance of the contract and the machines stand embedded into the earth, the applicant (L&T) has a charge to the extent of the unpaid amount”.
To read the full story, Subscribe Now at just Rs 249 a month