BHUSHAN POWER LENDERS TO VOTE ON TATA PROPOSAL TODAY

The committee of creditors (CoC) for Bhushan Power & Steel on Monday decided they would vote on Tata Steel’s resolution proposal on Tuesday. If the plan is approved by 75 per cent of the creditors, a letter of intent will be issued to the company and the resolution plan will be filed with the National Company Law Tribunal (NCLT) for approval. Tata Steel is understood to have offered ~175 billion as immediate upfront payment to financial creditors. The total bid value, however, is around ~245 billion, which includes a capital infusion of ~70 billion. Bhushan Power & Steel has a capacity of 3 million tonnes and debt of ~470 billion. Ishita Ayan Dutt & Abhijit Lele write

The committee of creditors (CoC) for Bhushan Power & Steel on Monday decided they would vote on Tata Steel’s resolution proposal on Tuesday.

If the plan is approved by the creditors, a letter of intent will be issued to the company and the resolution plan will be filed with the National Company Law Tribunal (NCLT) for approval.

Tata Steel is understood to have offered ~175 billion as upfront payment to financial creditors. The total bid value, however, is around ~245 billion, which includes capital infusion of ~70 billion. Bhushan Power & Steel has a capacity of three million tonnes and a debt of ~470 billion.

Tata Steel had a capacity of around 13 million tonnes and the acquisition of Bhushan Steel under the Insolvency and Bankruptcy Code (IBC) added another 5.6 million tonnes. However, there could be more litigation in the Bhushan Power & Steel case.

Sources close to the development said operational creditors had moved the tribunal with a plea that no decision should be made without hearing them.

Also, Liberty House last week had written to the CoC about the resolution professional making calls to Credit Suisse to enquire about funding arrangements. Lenders had felt that Liberty’s finances were not fully tied up even though the bid was higher by around ~10 billion than Tata Steel’s.

However, Liberty had moved NCLAT last week seeking a stay, and had appealed in its plea that the bank guarantees had not been acknowledged by the resolution professionals and the CoC.

Lenders went ahead with the resolution process for Bhushan Power after the NCLAT turned down a plea by Liberty House, to stay the resolution process, last week.

The NCLAT modified its earlier order and asked the CoC to go ahead with the resolution process and place it before the adjudicating authority. The adjudicating authority is also free to pass any order.

Earlier, the appellate tribunal had passed an order that said, during the pendency of appeal, the CoC might consider the resolution plan submitted by all resolution applicants which will be subject to the decision of this appeal. Though the CoC may approve the same with prior permission of the appellate tribunal, it cannot be placed before the adjudicating authority and must be kept in a sealed cover.

Bhushan Power & Steel was a two-way race when bids were submitted early February. Tata Steel and JSW Steel were the only two bidders. However, Liberty House submitted a late bid, which was initially rejected by the resolution professional and the CoC.

Subsequently, the NCLT asked the CoC to consider Liberty House bid, which was challenged by Tata Steel in NCLAT. That is still being heard in the appellate tribunal.