By Our Correspondent
NEW DELHI/BHUBANESWAR/JHARSUGUDA: Sajjan Jindal’s JSW Steel’s move to acquire debt ridden Bhushan Power and Steel Limited of Sanjay Singhal hangs in balance with barring SBI, other lenders like Punjab National Bank-led lenders to BPSL, are yet to accept the offer, sources said. Sources said that the JSW Steel had reached out to Punjab National Bank-led lenders to Bushan Power Steel Limited and said it was willing to raise the bid by Rs 400-450 crore. While lenders like SBI are in favour of accepting JSW Steel’s offer and close the deal at the earliest, others like PNB have not agreed yet. The closure of BPSL would add about three million tonnes capacity to JSW Steel’s existing 18 million tonnes.
The apex court is hearing a case filed by the promoter of Bhushan Power, Sanjay Singhal, where he claimed that JSW Steel should not have the right to profits earned by the company during the corporate insolvency resolution process (CIRP) and by allowing JSW to retain these profits, lenders were undervaluing the company. JSW’s Resolution Plan included Rs 19,350 crore to financial creditors against admitted claims of Rs 47,157.99 crore. Rs 350 crore to operational creditors, Officered to close transaction against bank guarantee/indemnity bond by lenders. Additional Rs 400 crore to financial creditors. Amount to distributed from BPSL EBITDA
It may be noted here that BPSL had managed to transport its finished goods worth Rs 700 from its Plants located in Odisha’s Jharsuguda plant without paying due taxes and duties. Enforcement Directorate had earlier found that the company surreptitiously cleared finished goods worth Rs 700 crore from Odisha’s Jharsuguda plant without payment of applicable taxes and duties and without issuance of any statutory invoice.ED had said after conducting raids on Resolution Professional in the matter of BPSL – Mahender Kumar Khandelwal – for allegedly helping the former promoters of the company in surreptitiously clearing finished goods for which he was paid in cash.
In a bid to cash in on the steel upcycle, Sajjan Jindal-controlled JSW Steel has offered to make the upfront payment to lenders of Bhushan Power & Steel to close more than a three-year corporate insolvency resolution process (CIRP). Additionally, the offer is being upped by Rs 400 crore to sweeten the deal.The additional outgo of Rs 400 crore would be distributed from the earnings before interest, taxes, depreciation and amortization (EBITDA) accrued to the company during the CIRP.
The National Company Law Appellate Tribunal – where JSW had appealed against the NCLT order – had, however, allowed JSW Steel to retain the EBITDA.Subsequently, it was challenged in the Supreme Court by former promoter, Sanjay Singal, in February 2020.Singal in his appeal, had pegged EBITDA at Rs 3,000 crore, and said that it should distributed among creditors.
He is not the only party to have raised a flag over the JSW transaction in the apex court. The Enforcement Directorate (ED) is also contesting applicability of the newly-inserted Section 32A of the Insolvency and Bankruptcy Code (IBC) – which gives immunity to the corporate debtor – to the JSW-Bhushan deal.According to the ED, the amendment came into force after the acquisition was approved by the NCLT last year. About a month after the approval, however, the ED issued a provisional attachment order for assets of BPSL valued at Rs 4,025.23 crore.
