The much-awaited Bhushan Power & Steel Limited (BPSL) resolution may close on Friday after a delay of over three years, with JSW Steel expected to transfer Rs 19,350 crore to the former’s lenders, CNBC-TV18 has learnt.
“We are expecting JSW to transfer the money for Bhushan Power by Friday (today). We are not expecting any delay. Banks have fully provided for this account by now, so whatever amount we are getting will show as profit straightaway,” said the head of a large public sector bank with exposure to BPSL.
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.
Sajjan Jindal-led JSW Steel is expected to deposit Rs 19,350 crore owed to financial creditors in an escrow account by today, which will then be distributed among lenders as per the approved resolution plan, said multiple people aware of the matter.
“JSW Steel will fund the acquisition through a mix of debt and internal accruals. Some like like SBI, Bank of Baroda have also given them loans to help with the takeover,” said another banker in the know. JSW Steel raised Rs 2,500 crore in the last tranche earlier this week to fund the transaction.
Bhushan Power & Steel Limited has a 2.8 MT plant in Odisha. 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 SBI 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 crore. JSW has also proposed to pay Rs 350 crore to operational creditors against their claims of about Rs 730 crore, amount to almost 48 percent recovery.
SBI is the largest lender to Bhushan Power and stands to recover over Rs 4000 crore. SBI had admitted claims of Rs 9825 crore against the company, Punjab National Bank Rs 7,355 crore (including claims of OBC, and United Bank of India which were merged into PNB), Canara Bank Rs 3,991 crore (including claims from Syndicate Bank which is merged into Canara Bank), Union Bank of India Rs 3,497 crore (including merger banks Andhra & Corporation), Indian Bank Rs 3,083 crore (including from ex Allahabad Bank), Bank of Baroda Rs 2,606 crore and so on.
Bhushan Power was one of the first list 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 September 2019, but the case has seen been stuck in courts.