The National Company Law Appellate Tribunal today dismissed objections against the sale of Bhushan Steel Ltd. to Tata Steel Ltd.
A two-judge bench headed by SJ Mukhopadhaya rejected pleas by Bhushan Steel founder Neeraj Singal and the firm's operational creditor Larsen & Toubro Ltd., and ruled that Tata Steel was eligible to bid for the debt-ridden company. Tata Steel had completed the acquisition of 72.65 percent stake in Bhushan Steel on May 18.
Bhushan Steel was the first of the 12 large corporate accounts that was referred for insolvency action in June 2017 by lenders, after the Reserve Bank of India directed them to do so.
The NLCAT order comes a day after the Serious Fraud Investigation Office arrested Singal for siphoning bank loans of about Rs 2,000 crore.
37% Haircut
The board of Bhushan Steel approved the sale of 74.99 shares to Tata Steel's wholly owned subsidiary Bamnipal Steel Ltd. for nearly Rs 159 crore, the company said in its May 18 filing with the stock exchanges. As part of this transaction, Bhushan Steel had also appointed three Tata Steel veterans – Anand Sen, Rajeev Singhal and Dibyendu Dutta – on its board.
Lenders to Bhushan Steel also received 7.25 crore equity shares worth Rs 2 each, after conversion of Rs 14.5 crore worth loans in the company, the exchange notification said.
Lenders to Bhushan Steel, led by State Bank of India, have received Rs 35,200 crore to settle their dues worth over Rs 56,000 crore, two people aware of the development had told BloombergQuint on the condition of anonymity. This works out to a 37 percent haircut for the financial creditors.
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