Tata Steel has offered close to INR 34,800 crore as upfront payment to banks and an additional INR 1200 crore to operational creditors for the Bhushan Steel acquisition
Tata Steel Ltd has emerged as the highest bidder to buy a controlling stake in Bhushan Steel Ltd, which is undergoing bankruptcy proceedings at the moment.
Tata Steel said that it has been identified as the highest bidder under the corporate insolvency resolution process by the committee of creditors of Bhushan Steel on 6 March, in a regulatory filing on Wednesday. It is in discussion with advisers to the committee of creditors and the resolution professional of Bhushan Steel on the next steps in the process, Tata Steel said in the statement.
Although Tata Steel did not disclose the financial details of the acquisition bid, two people close to the bidding process of Bhushan Steel said that the company has offered close to INR 34,800 crore as upfront payment to banks and an additional Rs1,200 crore to operational creditors. In addition, Tata Steel has also offered 12% equity stake to lenders in Bhushan Steel.
Tata Steel did not respond to requests seeking details of the bid until publishing of this story.
With this, Tata Steel has outbid rival JSW Steel Ltd., as reported on 8 February that JSW Steel had offered Rs29,700 crore to lenders of Bhushan Steel. Tata Steel and JSW Steel were the only bidders for the debt laden steel maker and had submitted their bids on 3 February.
The liquidation value of Bhushan Steel was fixed at Rs20,000 crore.
Bhushan Steel is the largest manufacturer of auto-grade steel in India and owes close to Rs44,000 crore in debt to various lenders.
The company is into manufacturing of flat products, hot rolled and cold rolled coils, besides operating a galvanised coil and sheet line. Its clients include General Motors Co., Hyundai Motors Co., Ford Motor Co., Mahindra and Mahindra Ltd and Eicher Tractors Ltd. Bhushan Steel is among the 12 cases identified by the Reserve Bank of India (RBI) for early bankruptcy proceedings.
According to the reports both Tata Steel and JSW Steel have also submitted bids for Bhushan Power and Steel Ltd, the liquidation value and the fair value have been fixed at Rs9,000 crore and Rs24,000 crore, respectively. Bhushan Power and Steel is promoted by the Singhal family, which also owns Bhushan Steel. The firms, however, were managed separately—Bhushan Power by Sanjay Singhal, and Bhushan Steel by Neeraj Singhal.