UK-based Liberty House Group said it was interested in bidding for Bhushan Power & Steel and sought an extension to the deadline to submit its resolution plan for the bankrupt company.
“Please note that we are also interested in submitting a viable and competitive resolution plan for the company,” said a Liberty letter addressed to Bhushan Power & Steel’s resolution professional, Mahender Khandelwal. “We believe we are in a position to give a resolution plan which the COC (committee of creditors) would consider very strongly, considering all the parameters they want to consider including the realisation to the lenders,” said the letter, which ET has seen.
Only two companies, Tata SteelBSE 0.36 % and JSW Steel, had submitted bids for Bhushan Power & Steel before the deadline closed on February 8. A Dubai-based group too had asked for an extension of the timeline, but that was declined, said a person close to developments. Vedanta Resources and Arcelor-Mittal had shown early interest, but didn’t submit any bids.
The Liberty bid is likely to value the company higher than the others, which means a smaller haircut for banks, an insolvency and bankruptcy professional said on the condition of anonymity. According to banks, the company owed them nearly Rs 48,000 crore.
Liberty declined to comment. Bhushan Power & Steel and its lead lender, Punjab National Bank, did not respond until press time Tuesday to ET’s emails seeking comment.
“Allowing us to participate (in the bidding) would be in the interest of all the stakeholders, in particular the lenders, as ultimate goal of the process is to have the best and most competitive resolution plan for the company in public interest,” said the letter. “In several cases, the bids received have been lower than we had anticipated, so perhaps a follow-up bid should be considered,” said a banker.
However, as the process is laid out at the moment, it doesn’t allow for a second round of bidding or an auction of assets.
Some bidders for bankrupt companies also ask for deferred payments, said a banker. It may make more sense to take a bigger haircut but have the cash in hand immediately, said this banker.
Around a dozen companies including promoter Sanjay Singhal and Liberty had submitted initial expressions of interest in Bhushan Power & Steel. Sanjay Singhal was disqualified after an ordinance amending the bankruptcy code in November prohibited defaulting promoters from bidding for their companies unless they had cleared their arrears.
A person close to the developments said Liberty’s bid delay was due to changes in the bankruptcy regulations. The last amendment to the Insolvency and Bankruptcy Code, 2016 was made as recently as on February 6. Bhushan Power & Steel owes close to Rs 48,000 crore to banks and was referred to the National Company Law Tribunal by Punjab National Bank in June last year.
Source: Economic Times