)
Debt-ridden Bhushan Steel has chalked out plan, in consultation with lenders, to raise around Rs 1,000 crore from sale and lease-back of critical assets to reduce its Rs 40,000 crore debt burden.
The plan was mooted first in January, but as a back-up. "It was our Plan B. We had then planned to raise funds through a qualified institutional placement (QIP), but since the environment is conducive at the moment, we are going ahead with Plan B," Bhushan Steel's director (finance), Nittin Johari, said.
The Bhushan Steel stock, which was at Rs 197.5 just about a month ago, closed at Rs 111 on the BSE. The stock took a severe beating after the company's vice-chairman and managing director, Neeraj Singal, was arrested by the Central Bureau of Investigation in connection with the Syndicate Bank cash-for-loan scam. On Monday, however, the stock was up by nearly five per cent.
| SEEKING A BREATHER |
|
Critical assets for Bhushan Steel would be its five oxygen plants and two coking coal plants. For the year, the company has decided to sell and lease-back oxygen plants. "Whether we do two or five, we have not decided. We are looking to raise Rs 1,000 crore from this," Johari clarified.
The move, if it finally materialises, would be a first for the steel sector. A steel producer said, "It's common in the aviation sector but has not happened in the domestic steel sector." Johari, however, noted that many steel companies had outsourced these operations. "But we followed a different model. These are assets we have created," he said.
At present, Bhushan Steel's term loan is around Rs 30,000 crore, much of which was for a 5.2 million tonne plant in Odisha. Working capital loan accounts for another Rs 10,000 crore. "A restructuring plan has been prepared and the company has been asked to raise money and de-leverage its books through sale and lease of critical assets. We will continue to monitor the progress on this front," said a senior banker with one of the lenders to Bhushan Steel.
He added that lenders had no immediate plans to attach and monetise personal assets of the promoters to recover their dues. "Loans to Bhushan Steel are still classified as standard asset by us. At this point, we are sticking to the restructuring plan that was decided last month. We will evaluate all possible options if the loans turn non-performing," the banker said. At the August 19 lenders' meet - held largely to secure their interest - it was decided that a forensic audit of Bhushan Steel would be done by an external agency. The consortium of lenders had also suggested that Bhushan Steel should look at selling some of its non-core assets. Johari explained that Bowen Energy, an Australian exploration company controlled by Bhushan Steel, had not been fully explored as yet.
The reserves estimate would emerge only after full exploration, which is still around nine months' away. "Once we have done the exploration, we can realise the full potential. Then we can partially sell beyond our own requirements," Johari pointed out. Bowen Energy has exploration licences for coking coal, thermal coal and uranium leases.
Till then, the company will have to bank on selling and leasing back some of its critical assets. In the interim, however, if the environment changes for the better, the QIP could be explored.
SEEKING A BREATHER
| The move, if it finally materialises, would be a first for the steel sector
| Critical assets for Bhushan Steel include five oxygen plants and two coking coal plants
| At present, Bhushan Steel's term loan is around Rs 30,000 crore
