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Bhushan Power lenders accept JSW Steel’s terms; target to close deal by March 31

Updated : March 05, 2021 04:42 PM IST

BPSL's lenders today voted in favour of accepting JSW Steel’s terms to close the deal by month-end

In a breakthrough for the long-awaited Bhushan Power & Steel Limited (BPSL) resolution, its lenders today voted in favour of accepting JSW Steel’s terms to close the deal by month-end, CNBC-TV18 has learnt.

“We are all in agreement on JSW’s condition that in case the Supreme Court rules against their takeover of Bhushan Power, we will return the money,” said the head of a large public sector bank with significant exposure to the debt-ridden steelmaker.

CNBC-TV18 had first reported on 1st March that lenders were largely in agreement with JSW Steel’s condition and willing to consider the escrow arrangement to close the deal at the earliest. CNBC-TV18 had also reported that lenders had decided to vote on the proposal to take the deal ahead soon.

Last Friday, JSW Steel wrote a letter to the creditors of the company, proposing to deposit the entire Rs 19,350 crores due to financial creditors as part of its resolution plan in an escrow account, to be released to them subject to certain conditions.

JSW Steel had sought indemnity from the creditors, that in case of an adverse ruling from the Supreme Court in the Bhushan Power matter, lenders will return the entire sum to JSW Steel, said three people directly involved in talks. This, JSW Steel had proposed, would ensure the deal is closed by the end of the month.

The creditors' committee concluded its voting today, with a significant majority of lenders voting in favour of accepting JSW Steel’s condition.

Sajjan Jindal-led JSW Steel is expected to deposit Rs 19,350 crores owed to financial creditors in an escrow account within two weeks, CNBC-TV18 has learnt.

The National Company Law Appellate Tribunal had granted immunity to JSW Steel from any prosecution emanating from past offences of the promoters of the company under Section 32A of the Insolvency & Bankruptcy Code last year.

However, the Enforcement Directorate had then moved the apex court, arguing that the NCLAT had no jurisdiction to unfreeze and approve the sale of an asset attached by the investigating agency, sought to scrap the sale of BPSL to JSW approved by NCLT in 2019. The ED attached has assets worth over Rs 4,025 crore of BPSL in connection with its money laundering probe linked to an alleged bank loan fraud by the company’s former owners.

JSW Steel is keen to close the transaction at the earliest to reap benefits of the rising steel prices, CNBC-TV18 had earlier reported.

The creditors stand to recover over 41 percent with JSW Steel’s offer to repay financial creditors Rs 19,350 crore against their claims of Rs 48,000 crores. Bhushan Power was one of the first lists of a dozen defaulters identified by RBI to be sent to NCLT for resolution. The NCLT had cleared JSW Steel's resolution plan for BPSL in Sep 2019, but the case has seen been stuck in courts.

SBI is the largest lender to Bhushan Power and stands to recover over Rs 4000 crores. SBI had admitted claims of Rs 9825 crore against the company, PNB Rs 4399 crore, ARCE ARC Rs 5257 crore, Canara Bank Rs 2244 crore and so on.

Published : March 05, 2021 02:26 PM IST

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