SSG Capital, a Hong-Kong based stressed asset investor, purchased about Rs 2,500 crore worth of Bhushan Steel Ltd.'s loans through an Indian asset reconstruction company from two public sector lenders.
Assets Care & Reconstruction Enterprise Ltd. bought Rs 1,300-crore loans from Bank of Baroda and Rs 1,130-crore loans from Union Bank of India at a sale concluded on Monday, two people with direct knowledge of the transaction told BloombergQuint requesting anonymity. ACRE ARC now holds about Rs 3,000 crore worth of steelmaker's loans. The sale is subject to approval of the boards of the respective boards.
The sale happened at a discount of about 50 percent with ACRE ARC offering upfront cash, the people said. Bank of Baroda and Union Bank of India didn't respond to emailed queries. A spokesperson for ACRE ARC declined to comment.
By consolidating loans in an insolvency account, a lender, as part of the committee of creditors, can have a greater say in the approval of a resolution plan. ACRE ARC had purchased Rs 600 crore worth of Bhushan Steel loans from Indian Overseas Bank in December. SSG Capital owns 49 percent stake in the asset reconstruction company. Other shareholders include Axis Bank Ltd. and Punjab National Bank Ltd.
Bhushan Steel, which owes lenders Rs 56,000 crore, is one of the largest accounts being resolved under the Insolvency and Bankruptcy code. It was one of the 12 companies the Reserve Bank of India identified in its first list for resolution under the new law. BloombergQuint on Monday reported that two bidders, Tata Steel Ltd. and a consortium led by JSW Steel Ltd., have submitted bids.
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