Bhushan Power and Steel (BPSL) might become the fifth non-performing asset (NPA) account to get resolved under the Insolvency and Bankruptcy Code (IBC) from the Dirty Dozen list as its lenders have started their voting on the received bids today at 4pm according to the latest reports. The voting is expected to last till 4pm of 17 Oct’18 and results are anticipated to be announced on Thursday this week i.e. on 18 Oct’18.
After a lull of two months, the Committee of Creditors (CoC) are basically deciding on the revised and increased bid (of INR 19,700 crore) submitted by Indian major JSW Steel for buying out bankrupt BPSL.
Besides JSW Steel, Liberty House and Tata Steel are also in the race to win the bankrupt yet prized company, which has a total debt of INR 47,000 crore.
In the first round of bidding, Tata Steel with the bid of INR 17,000 crore and JSW Steel with the bid of INR 11,000 crore emerged as the two leading bidders for bankrupt BPSL and UK based Liberty House’s bid (of INR 18,500 crore) was rejected by the CoC on the grounds of being late entrant in the bidding process.
However, Liberty House challenged this decision of CoC before NCLT (National Company Law Tribunal). NCLT subsequently gave the decision in favour of Liberty House and ordered BPSL’s lenders to consider its bid. NCLT’s this decision in favour of Liberty House irked Tata Steel (which emerged as the highest bidder for BPSL) which then challenged this order of NCLT to NCLAT (National Company Law Appellate Tribunal).
Much to Tata Steel’s disappointment, NCLAT also gave the decision in favour of Liberty House claiming that its bid cannot be disqualified only on the ground of being submitted after the deadline of the resolution professional (RP).
Later on in Aug’18, JSW Steel reportedly revised its bid from an upfront payment of INR 11,000 crore to INR 19,700 crore after which the case went idle and now with the commencement of voting process, fate of BPSL is likely to be decided soon.
BPSL featured among the 12 accounts recommended by RBI’s (Reserve Bank of India) internal advisory committee for resolution under the Insolvency and Bankruptcy Code (IBC) in June last year. Bhushan Power has a 3 MnT of steelmaking capacity.
Tata Steel wanted to acquire BPSL as the former already has its own iron ore mines in states including Odisha, thus making it low-cost steel producer in India. These mines would have provided raw material to BPSL thus saving on the raw material costs and generating profits from BPSL’s assets. However, if JSW Steel finally wins BPSL, it would give the company a toehold in the east. UK based Liberty House has been trying to enter the Indian steel circuit since last three years and acquisition of BPSL would provide the same opportunity to the company.
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