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L&T moves to NCLT against Bhushan Steel
09 March 2018, 05:28 | Melissa Porter
L&T moves NCLT to be declared as secured creditor in Bhushan Steel insolvency
Yesterday, Tata Steel said that "it has received a formal communication from the resolution professional [RP] of Bhushan Steel Ltd that it has been identified as the highest evaluated compliant resolution applicant to acquire controlling stake" of the beleaguered company under the Insolvency and Bankruptcy Code 2016.
The engineering and construction company had bagged a Rs1,205 crore order from Bhushan Steel for construction related work at the latter's Odisha plant in September 2007.
Bhushan Steel has an annual production capacity of 5.6 million tons and would significantly boost Tata Steel's annual output, now 13 million tons.
Tata Steel gained 39 percent, while Bhushan Steel declined 38 percent in the last 9 months. It also supplies steel for producing consumer goods such as refrigerators and washing machines.
Bhushan Steel owes Rs44,478 crore crore to a consortium of creditors led by State Bank of India, and is presently undergoing insolvency resolution process under a plea admitted by NCLT on 26 July.
"The advisers to the CoC and the resolution professional of BSL are now in discussions with Tata Steel on the resolution plan".
While Tata Steel did not disclose the final purchase price or the transaction's terms and conditions, Moody's said nevertheless, based on media reports, the purchase price could result in a haircut of around 25% for the lenders to Bhushan Steel.
The surge in cases comes after the government changed the law giving greater powers to the Reserve Bank of India (RBI), which has so far ordered creditor banks to push almost 40 companies with loan defaults of almost 4 trillion rupees ($62.5 billion) into bankruptcy proceedings.
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