As per the latest updates, JSW Steel is declared as the winning bidder for Bhushan Power and Steel (BPSL) after the Committee of Creditors (CoC) sent a letter of intent (LoI) to the Sajjan Jindal-owned JSW Steel.
After JSW Steel accepts the LoI, the resolution professional will submit JSW Steel’s plan to the National Company Law Tribunal (NCLT) for its approval and with NCLT’s approval, the year-long battle between JSW Steel and Tata Steel to acquire BPSL will come to an end.
JSW Steel leaves behind Tata Steel and Liberty House
Tata Steel and JSW Steel, India’s top two steelmakers, as well as British metals and industrial firm Liberty House had submitted their bids twice for BPSL. While Tata Steel and Liberty House had kept their offers unchanged at INR 17,000 crore and INR 18,500 crore respectively, JSW Steel had increased its offer from INR 11,000 crore to INR 19,650 crore in the second round of bidding.
Subsequently, the tables turned in favour of JSW Steel as earlier Tata Steel with a bid of INR 17,000 crore was chosen as the preferred bidder by the CoC. However, later with the increase in JSW Steel’s bid, more than 66.6% of the BPSL’s indebted creditors approved JSW Steel’s revised bid.
While Tata Steel had challenged Liberty House’s bid, which it said was submitted after the deadline, and also JSW Steel’s revised, higher offer, which was also submitted after the deadline, the NCLAT ruled that the Tata’s plea was “premature” and “unmaintainable” and said that it would not interfere with JSW Steel’s bid as majority of lenders have given their approval for JSW Steel’s offer.
JSW Steel had made INR 19,650-crore offer, which included an upfront payment of INR 19,300 crore, with another INR 350 crore earmarked for operational creditors.
BPSL’s acquisition will give JSW Steel entry in east India
If JSW Steel is successful in BPSL’s takeover, this acquisition would also compensate for JSW Steel’s failed bid for Bhushan Steel (now renamed Tata Steel BSL), which went to the Tatas for INR 35,200 crore. However, JSW Steel can hope to bag Bhushan Power and Steel only after its resolution plan is approved by the NCLT.
With JSW Steel taking over Bhushan Power and Steel, it will secure the company a footprint in mineral-rich state of Jharkhand, where its nearest rival Tata Steel has a strong production footprint across Odisha (Kalingangar and Tata Steel BSL and Jharkhand (Jamshedpur).
The stressed asset BPSL was 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 2017. The company has total debt of INR 47,000 crores and production capacity of 3.5 MnT in Jamshedpur.
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