The National Company Law Tribunal (NCLT) has approved billionaire Sajjan Jindal-led JSW Steel Ltd’s offer of Rs 19,700 crore ($2.7 billion) to buy debt-laden Bhushan Power & Steel Ltd.
JSW Steel said in a stock-exchange filing the principal bench of the NCLT in New Delhi gave its clearance on Thursday. The company is awaiting the written order containing the details and terms of such approval, it said.
Bhushan Power is one of the 12 biggest corporate defaulters that the Reserve Bank of India had listed in June 2017 for banks to start insolvency proceedings.
In recent months, the company has been stung by a series of accounting frauds worth Rs 5,600 crore reported by three state-run banks—Allahabad Bank, Punjab and Sind Bank, and Punjab National Bank (PNB).
The NCLT said that the criminal cases against the founders of Bhushan Power for siphoning off the funds will not impact JSW Steel as its new promoter. The court also appointed a monitoring panel to oversee the implementation of JSW’s resolution plan, a banker said, asking not to be named.
According to the banker, the tribunal said that the profits made by Bhushan Power during the insolvency period will be distributed among the creditors.
The corporate insolvency resolution process against Bhushan Power was initiated on July 26, 2017 on a plea filed by its lead lender PNB. In February this year, the NCLAT directed the NCLT to decide on the resolution plan submitted by JSW Steel. Thereafter, the NCLT had reserved its decision.
The delay in approval had prompted the PNB-led Committee of Creditors of Bhushan Power to approach the NCLAT to expedite the resolution process.
JSW Steel had outbid two of its rivals—Tata Steel Ltd and the UK’s Liberty House Group—in the race for Bhushan Power. It will add 3.5 million tonnes a year capacity with the help of Bhushan Power’s assets to its kitty.
Apart from JSW Steel, steelmakers Tata Steel and ArcelorMittal have been aggressive in buying distressed steel companies which are struggling to reduce debt but have strong operating assets.
Last year, Tata Steel had bought Bhushan Steel Ltd (now Tata Steel BSL Ltd) for Rs 35,200 crore. Earlier this year, it won the race to take over Delhi-based Bhushan Energy Ltd.