Bhushan Power and Steel Insolvency process set to enter second leg
The insolvency resolution process for Bhushan Power and Steel is set to enter its second leg, with the committee of creditors (CoC) about to circulate bid documents among at least eight companies and financial institutions which have evinced interests in acquiring the steel firm. “Bid document is under finalisation and will be circulated within the next two-three days,” a source said.
In September, insolvency resolution professional (IRP) Mahender Khandelwal had called for qualification documents from interested parties on or before October 6. Apart from the promoters, Tata Steel, Arcelor Mittal, JSW Steel, Vedanta Ltd, Mesco and AION Capital are among companies that evince interest in the firm, which owes lenders close to `47,000 crore.
With the recent amendments to the Insolvency and Bankruptcy Code, the promoters can place bid only after clearing the overdue amount including interest and other charges. Sources said apart from these companies, others which have not yet submitted resolution plans can now submit them by December 23.
Bhushan Power and Steel was admitted by the insolvency court on July 26 on a plea by Punjab National Bank. Once a case is admitted, the IRP has to come up with a resolution plan within 180 days, extendable by another 90 days.
“The delay in finalising the evaluation criteria has made the IRP to extend the deadline for submitting resolutions plans. Also, there were hopes that some other companies might submit their plans. However, no addition to the list of suitors is expected, even as the promoter family is unlikely to take part in the final race,” the source said.
The evaluation criteria has now been finalised and approved by the CoC.
All the parties responded to the EoIs visited Bhushan Power and Steel’s integrated steel unit at Jharsuguda in Odisha that has an annual capacity of 3.5 MTPA, and had detailed deliberations with the key managerial personnel of the company and the IRP.
The firm also has two processing centres in Kolkata and Chandigarh.
The 1,000 MW power plant of the company is also based in Odisha. Promoters of Bhushan Steel collectively hold 43.74% stake in the company.
Bhushan Power and Steel reported a net loss of Rs 3,501 crore in 2016-17 on revenues of Rs 15,027 crore.
In its annual report for FY14 (the latest available), Bhushan Power and Steel said it had borrowed from 41 banks, including seven foreign lenders. Data from Capitaline show that the company reported a net loss of Rs 2,433 crore in FY16 on Rs 8,491 crore in revenues.
Source said Khandelwal, partner and head, business restructuring, BDO, would soon call a meeting of the CoC, probably by the next week, for finalisation of the bid evaluation matrix and score, based on which the resolution plan submitted by the bidders will be evaluated by process advisors.