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JSW concludes Bhushan Power acquisition; lenders to recover Rs 19,350 cr in March quarter

Updated : March 26, 2021 05:42 PM IST

The much-awaited Bhushan Power & Steel Limited (BPSL) resolution has finally closed, with JSW Steel transferring Rs 19,350 crores to the former’s lenders to acquire the company. CNBC-TV18 was the first to report that the transaction will be concluded today itself.

In a statement to exchanges this afternoon, JSW said confirmed that it now holds 100 percent equity stake in Bhushan Power through its wholly-owned subsidiary Piombino Steel Limited (PSL), as the resolution plan has now been implemented.

“Pursuant to the implementation of Resolution Plan, that inter-alia included payment of Rs. 19,350 crore to the financial creditors of BPSL and merger of SPV with BPSL, PSL (Piombino Steel Limited) holds 100% equity shares in BPSL,” JSW said.

It added, “A sum of Rs 8,614 crore in aggregate was arranged in Piombino Steel Limited ("PSL"), currently a wholly-owned subsidiary the Company, through a mix of equity issued to the Company, optionally convertible instruments (convertible to equity shares at par) issued to the Company and JSW Shipping & Logistics Private Limited ("JSLPL") and debt availed by PSL ("PSL Funds"). The PSL Funds included a total Infusion of Rs. 5087 crore by the Company in the form of equity and optionally convertible instruments. Of the PSL Funds, an amount of INR 8550 crore was invested in Makler Private Limited ("SPV") through equity and convertible instruments. The SPV also availed short term loans.”

Very proud that with the acquisition of Bhushan Power and Steel Ltd., we have made our entry in Odisha-East India and are now the country's leading Steel Maker. On behalf of all @TheJSWGroup I am happy to welcome the employees of #BPSL to the JSW Family!
— Sajjan Jindal (@sajjanjindal) March 26, 2021

The deal, however, comes with riders. CNBC-TV18 had earlier reported that JSW Steel had proposed to conclude the transaction at the earliest on the condition that banks provide it indemnity in case of an adverse ruling from the Supreme Court, where the Bhushan Power case is still being heard. On March 5th, Bhushan Power’s lenders voted in favour of accepting the condition to return the entire sum to JSW Steel in case the apex court ruled against it, CNBC-TV18 had reported.

Senior officials of two public banks with exposure to BPSL confirmed to CNBC-TV18 that the money had come in an escrow account, and was in the process of being distributed among lenders as per the approved resolution plan.

“JSW had made the transfer of money, it will be distributed among all banks now. We can show it as recovery in the March quarter, as expected,” said one of the people quoted above.

“Banks have fully provided for this account by now, so whatever amount we are getting will show as profit straight away,” the head of a large public sector bank with exposure to BPSL had told CNBC-TV18 earlier.

Bhushan Power & Steel Limited has a 2.5 MTPA integrated steel unit in Odisha and had a turnover of Rs 8,635 crores as of March 31, 2020.

The acquisition will pave the way for JSW Steel to mark its manufacturing presence in the eastern part of India, which has so far been the stronghold of Tata Steel and SAIL.

The financial creditors led by the State Bank of India stand to recover over 41 percent with JSW Steel’s offer to repay financial creditors Rs 19,350 cr against their claims of Rs 48,000 crores. JSW has also proposed to pay Rs 350 crores to operational creditors against their claims of about Rs 730 crores, amount to almost 48 percent recovery.

SBI is the largest lender to Bhushan Power and stands to recover over Rs 4000 crores. SBI had admitted claims of Rs 9825 crores against the company, Punjab National Bank Rs 7,355 crores (including claims of ex OBC, and ex-United Bank of India which were merged into PNB), Canara Bank Rs 3,991 crores (including claims from Syndicate Bank which is merged into Canara Bank), Union Bank of India Rs 3,497 crores (including merger banks Andhra & Corporation), Indian Bank Rs 3,083 crores (including from ex Allahabad Bank), Bank of Baroda Rs 2,606 crores and so on.

Bhushan Power was on the first list of a dozen defaulters identified by RBI and was admitted in NCLT for resolution in July 2017. The NCLT had cleared JSW Steel's resolution plan for BPSL in September 2019, but the case has been stuck in courts since with BPSL’s former promoters, Enforcement Directorate challenging the resolution. The Supreme Court is currently hearing the matter.

Published : March 26, 2021 04:59 PM IST

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