Companies

JSW Steel completes BPSL acquisition

Suresh P Iyengar Mumbai | Updated on March 26, 2021

Pays ₹19,350 crore through its wholly-owned subsidiary

JSW Steel, through its wholly-owned subsidiary Piombino Steel, has paid ₹19,350 crore to acquire 2.5 mtpa production capacity of Bhushan Power and Steel at Jharsuguda in Odisha and downstream facilities in Kolkata and Chandigarh.

Piombino Steel had raised ₹8,614 crore through the optionally convertible instrument, which can be converted into equity shares at par to JSW Steel and promoters-owned JSW Shipping and Logistics. Of this, JSW Steel had infused ₹5,087 crore through equity and optionally convertible equity.

 

This apart, Makler Pvt Ltd had extended ₹8,550 crore through equity and convertible instruments while the remaining ₹2,186 crore was raised through short term borrowings.

Following the payment, Piombino Steel will hold 10 crore equity shares of ₹10 each and 8,450 crore compulsory convertible debentures, which accounts for 100 per cent equity share capital of BPSL.

The acquisition will provide JSW Steel with a foothold in the eastern states, the hub of steel production in India. Last year, JSW Steel had acquired five iron ore mines in Odisha, and these mines areclose to BPSL plants.

In corporated in 1999, BPSL produces billets, hot and cold-rolled coils. The company had defaulted on ₹48,000 crore outstanding debt and was dragged to National Company Law Tribunal for insolvency in July 2017.

More than two years later, NCLT had approved the resolution plan submitted by JSW Steel in September, 2019. However, the Enforcement Directorate had issued a provisional order of attachment of BPSL’s assets valued at ₹4,025 crore in October 2019 and objected to the applicability of Section 32A of the insolvency law to the JSW-Bhushan deal.

Section 32A of Insolvency and Bankruptcy Code provides immunity to the Corporate Debtor for the offence committed prior to commencement of Corporate Insolvency Resolution Process once Resolution Plan has been approved by Adjudicating Authority.

However, NCLAT gave its final approval, including the immunity sought by JSW Steel against the investigation being carried against BPSL erstwhile promoters last February.

While accepting the petitions filed by ED and erstwhile BPSL promoters, the Supreme Court did not stop the lenders from implementing the approved resolution plan but put a condition that lenders have to repay the money to JSW Steel if the verdict goes against them.

 

Published on March 26, 2021

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