Bhushan Steel was under Corporate Insolvency Resolution Process (CIRP) and on May 15, 2018, resolution plan was approved by the NCLT. On May 18, 2018,  the company was acquired by Bamnipal Steel Limited (BMSL), a wholly owned subsidiary of Tata Steel Limited and later on renamed it to Tata Steel BMSL Ltd. Company recently issued its first Annual report post acquisition. We tried to dive into the impact of the resolution plan to the financial, other stakeholders and other aspects through this article.

Structuring of the deal

As a part of resolution plan, BMSL paid Rs. 35,100 crores to the financial creditors of Bhushan Steels to settle their claims. Amount was infused by way of issue of equity shares and inter-corporate deposits. Detail break-up is as follows:

Table 1: Resolution Plan Break-Up (All Figs in ₹ Lacs)

Issue of Shares to BMSL (Rs. 2 each) 15,888.58
Treated as Inter-Corporate Deposit 34,97,369
CIRP and employee’s payment 3,258
Payment to Financial creditors 35,10,000

Note: ICDs are fully repaid by the end of Mar-19. Proceeds from the Issue of Preference shares (to Tata Steels) and borrowings is utilised.

Capital structure

New shares were issued to the BMSL as a preferential allotment as per the resolution plan and their shareholding stands at 72.65% of total capital. Further erstwhile promoter and its group shareholding was 43.90% as on Mar-18, and during the year bankers invoked the pledge on their shares and their shareholding reduced to 3.46% as on date of implementation of plan and subsequently, they were reclassified from promoter group to public category, their shareholding remains unchanged as on Mar-19.


*72496036 shares are issued to lenders on conversion of certain debt into equity, and bankers also invoked pledge on shares of some promoters and sold in the market. Market value of shares invoked is Rs. 181.75 crores. We noticed a mismatch in no. of shares for which the pledge was invoked as per disclosure submitted to Stock exchanges (6,15,68,990) and as mentioned in the audited balance sheet (6,76,54,810). Reconciliation of shares at the beginning and at the end of bankers holding is not available since certain shares might be sold off by the bankers in the open market.

Implication on various stakeholders

Already a user? Sign in