JSW Steel gets letter of intent for Bhushan Power & Steel acquisition

Bhushan Power & Steel, one of the 12 cases mandated by the Reserve Bank of India to be resolved under the Insolvency and Bankrutcy Code (IBC) has got a leg-up with the letter of intent (LOI) of being issued in JSW Steel's favour.

Sources close to the development said the next step was to file the resolution plan with the National Company Law Tribunal (NCLT) for approval. 

JSW Steel's upfront offer for Bhushan Power was Rs 19,300 crore and another Rs 350 crore had been offered for operational creditors. Bhushan Power's total admitted financial claims amount to Rs 47,148 crore as on February 7, 2019.

The government had set a target of resolving the cases on the RBI's first list by March. However, sources indicated that past cases resolved on the first list had taken significant time. 

Most of the cases resolved on RBI's first list had breached the stipulated 270-day period for resolution under the IBC. For instance, Monnet Ispat & Energy was resolved in 371 days, Bhushan Steel in 293 days; Electrosteel, however, was wrapped up in 270 days. The Bhushan Power and Steel case has been dragging for more than 560 days now.

Earlier in the month, the National Company Law Appellate Tribunal (NCLAT) had cleared the decks for Bhushan Power by upholding the decision of the committee of creditors to approve JSW Steel's resolution plan. 

The NCLAT judgment was in the wake of a plea moved by Tata Steel opposing National Company Law Tribunal (NCLT)’s decision asking the CoC to consider the resolution plan submitted by Liberty House, submitted after the deadline. Tata Steel had also opposed the revision of bids by JSW Steel. 

Initially, there were two bidders for Bhushan Power: Tata Steel and JSW Steel. Liberty House joined in later after NCLT asked the CoC to consider it.

For JSW Steel, bagging Bhushan Power would mean getting a foothold in the east. Bhushan Power has a capacity of 3.5 million tonnes with facilities across Odisha, Bengal and Chandigarh.

Bhushan Power has a significant land bank and according to some sources, a ramp-up to five million tonnes wouldn't take much time.

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