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Bhushan Steel shares rallied as much as 20 per cent on Monday as a media report said that ArcelorMittal has showed interest in buying the company.
Global steel giant ArcelorMittal has evinced interest in buying debt-laden Bhushan Steel, which has been referred by the Reserve Bank of India for liquidation under the Insolvency and Bankruptcy Code (IBC), the report said.
"LN Mittal-led ArcelorMittal has submitted an expression of interest for Bhushan Steel, which has been referred to the National Company Law Tribunal (NCLT) under Insolvency and Bankruptcy Code," the report added.
Bhushan Steel has a significant presence in auto steel categories with a 5.6-million tonne integrated steel unit, including a cold rolled facility, in Odisha.
The company owes nearly Rs 42,000 crore to lender banks and was admitted into NCLT in July 2017. It is one of the two biggest companies to have been admitted under insolvency proceedings this year along with Essar Steel.
The National Company Law Tribunal had in July reserved its order over the bankruptcy petition filed by the country’s largest lender SBI against Bhushan steel Ltd. A Bench headed by Justice MM Kumar also reserved order on the plea filed by Punjab National Bank against Bhushan Steel & Power Ltd.
NCLT, on July 13, had issued notices to Bhushan Steel Ltd as well as Bhushan Steel and Power Ltd over insolvency proceedings initiated by their lenders State Bank of India and PNB. The companies were directed to file their reply.
Both the petitions were filed under the Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, where the financial creditor initiates insolvency proceedings with a claim. While SBI was the lead banker to Bhushan Steel, PNB was the lead banker to Bhushan Steel and Power.
SBI was claiming to recover Rs. 4,295 crore from Bhushan steel along with $490 million foreign currency loan.
Earlier in June, lenders led by the State Bank of India had decided to begin insolvency proceedings against Bhushan Steel, Essar Steel and Electrosteel Steels by referring them to NCLT for recovery under the Insolvency and Bankruptcy Code (IBC).
The decision was taken at a marathon meeting chaired by SBI. While Bhushan Steel is in default of ₹44,478 crore to banks, Essar Steel owes ₹37,284 crore and Electrosteel Steels, ₹10,273.6 crore.
These three borrowers are among the 12 accounts identified by the Reserve Bank for immediate reference to the National Company Law Tribunal. These 12 accounts alone constitute a quarter of the over-₹8 lakh-crore of NPAs.
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