In an all-cash deal, Union Bank of IndiaBSE 1.24 % and Bank of BarodaBSE 0.13 % (BoB) are set to sell the Bhushan SteelBSE 6.98 % loan to Acre ARC, owned by SSG Capital, at a 50% haircut just a few days after the steelmaker went under the hammer.
The two banks had together put up Rs 2,430 crore in loans for sale. Bhushan Steel is facing bankrupcy proceedings and in the process of finalising resolution plan. “Acre ARC made the highest offer among other asset reconstruction companies (ARC) which were also in the fray. The final decision on whether to sell the loan to Acre ARC will be made by the end of this week or early next week,” said a person familiar with the development.
If the Union Bank and BoB deal goes through, SSG will have Rs 3,030 crore of loans of Bhushan Steel, and have a significant say on the resolution plan. It would be the third largest lender after State Bank of India, which has an exposure of Rs 12,878 crore, and Punjab National Bank with Rs 4,905 crore.
On February 5, Union Bank put on block Rs 1,130 crore while BoB put on sale Rs 1,300 crore of Bhushan Steel’s loans. The other bidders were Edelweiss ARC and J M Financial ARC, said the person cited above.
In the past, Acre had acquired Rs 600 crore of loans from Indian Overseas Bank in an all cash deal for Rs 376 crore, which implies a haircut of 40% for IOB.
The resolution professional for Bhushan Steel has accepted Rs 44,498 crore in claims from financial creditors.
