Billionaire Sajjan Jindal-led JSW Steel Ltd on Thursday won a bankruptcy court nod for a Rs 19,700-crore takeover of Bhushan Power & Steel Ltd, capping a two-year insolvency process initiated by lenders to recover unpaid loans.
The National Company Law Tribunal (NCLT) approved its bid, which was recommended by a committee of lenders to Bhushan Power and Steel over rival bids by Tata Steel Ltd and Liberty House Group.
According to the order of the NCLT, Rs 19,350 crore will be distributed among financial creditors to settle their Rs 47,158 crore of admitted claims. The remaining Rs 350 crore would be paid to operational creditor to settle less than half of their Rs 733.76 crore admitted claims.
Banks would get 41.03 per cent of their outstanding dues as compared a liquidation value of between Rs 9,320 crore and Rs 9,707 crore, it said.
JSW Steel will make an infusion of Rs 7,200 crore in the company for improving operations of the company.
Bhushan Steel and Power Ltd was dragged to insolvency by lenders led by PNB after the company failed to pay loans within the stipulated time-frame.
The NCLT in its 138-page order also stated that profits made by the company during the two-year insolvency period must be distributed to creditors, in accordance with a ruling by the NCLAT in a case involving ArcelorMittal-Essar Steel India Ltd.
Bhushan Power and Steel will add 3.5 million tonnes a year of capacity to JSW. It had in July 2018 along with partner Apollo Global Management LLC-backed Aion Capital Partners bought Monnet Ispat & Energy Ltd under the new bankruptcy process.
JSW plans to look for a partner for Bhushan Power, as it did for Monnet, once the deal is completed.
The NCLT said criminal proceedings against the former founders of Bhushan Power and Steel on the alleged siphoning off of funds would not impact JSW's takeover.
"The criminal proceedings initiated against the erstwhile members of the board of directors and others shall not effect the JSW - H1 (highest) Resolution Plan Applicant or the implementation of the resolution plan," it said.
It, however, did not grant JSW certain reliefs sought from statutory authorities under the Income Tax Act and the RBI among others.
"We leave it open to the members of the Committee of Creditors to file appropriate applications if criminal proceedings result in the recovery of money which has been siphoned off or on account of tainted transactions or fabrication," the NCLT said on charges against former promoters.
It also appointed a monitoring panel to oversee implementation of JSW's resolution plan and said the power of the board of directors of BPSL "shall remain suspended until the closing date" of the deal.
Under similar bankruptcy proceedings, mining baron Anil Agarwal's Vedanta Ltd had acquired for Rs 5,320 crore and Tata Steel Ltd bought Bhushan Steel Ltd for Rs 35,200 crore. But insolvency of Essar Steel, for which ArcelorMittal was the highest bidder with Rs 42,000 crore bid, is stuck in legal wrangles.
JSW has a steel making capacity of 18 million tonnes per annum and has plans to boost capacity to 45 million tonnes by 2030.
Earlier, in July PNB had said that it had detected Rs 3,805 crore fraud by BPSL and several other lender had also come forward.
Around 85 per cent of PNB's Rs 4,399 crore exposure to the company had been siphoned off.
Investigate agency CBI has already registered complaint in April names several other lenders.
According to the CBI, BPSL diverted around Rs 2,348 crore through its directors and staff from the loan accounts of PNB, Oriental Bank of Commerce, IDBI Bank and UCO Bank into the accounts of more than 200 shell companies without any obvious purpose.