Tata Steel has acquired Bhushan Steel (BSL) through its wholly-owned subsidiary Bamnipal Steel Ltd (BNL) through a resolution under the Insolvency and Bankruptcy Code (IBC). Tata Steel has taken a controlling stake of 72.65% in BSL and paid the admitted corporate insolvency costs and employee dues, as required under IBC. Bhushan steel was one of the few resolved amongst 12 companies recommended by RBI under Insolvency and Bankruptcy Code.

Tata Steel Ltd (TSL) is part of Tata Group and a public limited company engaged in the business of manufacturing steel and offers a broad range of steel products including a portfolio of high value-added downstream products such as hot rolled, cold rolled and coated steel, rebars, wire rods, tubes and wires. The equity shares are listed on BSE and on NSE. The market cap of the company is Rs 57,123 crores (approx.).

Bamnipal Steel Limited (BNL) is a public limited company incorporated on January 19, 2018 formed as an SPV (Special Purpose Vehicle), wholly owned subsidiary of TSL, in order to facilitate the acquisition of Tata Steel BSL Limited (TBSL) by way of the corporate insolvency resolution process (“CIRP”) prescribed under the Insolvency and Bankruptcy Code, 2016 (IBC Code). Pursuant to the order of the Adjudicating Authority dated May 15, 2018 (“IBC Order”), the TSL through the BNL acquired 72.65%of the equity share capital of the TBSL. At present, BNL does not have any operations.

Tata Steel BSL Limited (TBSL) formerly known as Bhushan Steel Limited is India’s third  largest secondary steel producing company with an existing steel capacity of 5.6 million tonne per annum is engaged in the business of manufacturing steel and offers products such as hot rolled, cold rolled and coated steel, cold rolled full hard, galvanized coils and sheets, high tensile steel strips, colour coated tiles, precision tubes, large diameter pipes, etc. TBSL is subsidiary of BNL and equity shares of the company are listed on BSE and on NSE.

CIRP process of erstwhile Bhushan Steel Ltd

  • CIRP process was initiated on July 26, 2017, under the provisions of the IBC Code. Pursuant to the initiation of the CIRP, TSL submitted its resolution plan for the resolution of Bhushan Steel and was selected as the highest compliant resolution applicant by the committee of creditors constituted under the IBC Code. On 15th May 2018, NCLT approved TSL’s resolution plan.
  • Pursuant to the Resolution Plan, BNL subscribed to 72.65% of the equity share capital of TBSL for an aggregate amount of Rs 158.89 crore and provided additional funds aggregating to Rs 35,073.69 crore to TBSL by way of debt/convertible debt. The remaining 27.35% of TBSL’s share capital will be held by TBSL’s existing shareholders and the financial creditors who received shares in exchange for the debt owed to them.
  • The acquisition is financed by combination of external bridge loan of Rs 16,500 crore availed by BNL and balance through investment by Tata Steel in BNL. The bridge loan availed by BNL is expected to be replaced by debt raised at BSL over time.
  • The funds received by TBSL as debt and equity have been used to settle the sustainable debts owed to the existing financial creditors of TBSL, CIRP costs and employee dues, by payment of Rs 35,232.58 crore.
  • The remaining unsustainable debts of Rs 25,285.46 crore were novated by the financial creditors to BNPL for a consideration of Rs.100 crores. BNPL, in its capacity as the promoters of TBSL, has waived off the unsustainable debts less cost of novation and the same has been recognised as equity contribution during the year ended March 31, 2019.
  • 10% Redeemable Cumulative Preference shares of Rs 100 each amounting to Rs. 2,425.57 crore were redeemed for a total sum of Rs. 4,700. Gain arising out of redemption was recorded as exceptional item in the financial results for the year ended March 31, 2019.
  • Operational creditors are to be paid Rs. 1,200 crores will be paid over a period of 12 months.
  • Total capacity of TSBL is 5.6 Million tonne per annum

Transaction:

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