NCLT approves Tata Steel's bid for Bhushan Steel

At 1.20pm Tata Steel shares were up 3.85% at Rs633.60 on BSE while Bhushan Steel shares rose 4.81% to Rs23.95

At 1.20pm Tata Steel shares were up 3.85% at Rs633.60 on BSE while Bhushan Steel shares rose 4.81% to Rs23.95

Significantly, the tribunal also dismissed a plea filed by the employees of Bhushan Steel opposing Tata Steel's bid and imposed a fine of Rs 1 lakh.

NCLT has also dismissed L&T's plea seeking higher priority in the recovery of a loan as the financial creditor and imposed Rs 1 lakh fine. The CoC had selected Tata Steel, which had offered Rs 32,500 crore as upfront payment along with 12.27 per cent equity in BSL to the creditors.

In a regulatory filing, Bhushan Steel said that the funds received from the investment will be to the tune of 35,132.58 crores and will be used to settle the existing debts of the company. It will be funded through a combination of equity and inter-corporate loans, of which upto Rs 9,000 crore loans have an option of conversion into equity shares of BSL.

The tribunal accepted the plan filed by BSL's resolution professional (RP), which was approved by the Committee of Creditors (CoC) led by SBI, after finding Tata Steel as the highest bidder.

"As per the approved Resolution Plan, BNPL shall be classified as the "promoter" of BSL, and the existing promoters shall be de-classified as "promoters" of BSL for the purposes of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015", the statement added. The employees had contended that Tata Steel was not eligible under section 29 (A) of the Insolvency and Bankruptcy Code (IBC).

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Bhushan Steel was on the RBI's first list of 12 companies referred to the National Company Law Tribunal past year.

Tata Steel will be taking a 72.65% stake in Bhushan Steel, through its subsidiary Bamnipal Steel Ltd (BNPL).

Bhushan Steel is one of 12 companies transferred to the bankruptcy court in 2017, over a government move to clear bad loans choking credit at Indian banks.

Following NCLT approval the only other nod that is awaited is from the Competition Commission of India (CCI).

Acquisition of BSL will be a key element in Tata Steel's domestic growth strategy under new Tata Sons chairman N Chandrasekaran. This acquisition will not only help it to tighten its grip on the country's eastern region but perhaps also help it to snatch the title of "India's largest steel maker" from JSW Steel. A combination will transform the former into a leading producer of flat steel in India, as the leader is now JSW Steel with about 13 million mt/year of capacity. Bhushan Steel makes flat products like hot- and cold-rolled coil (HR/CR coils) and galvanised sheets. NCLT has also directed BSL's ex-management to cooperate with the monitoring agency during the implementation of the resolution plan and granted it liberty to approach it during the process. The company, which was admitted for insolvency proceedings last February, had defaulted on its ₹56,000-crore loan.

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