JSW Steel seeks more time to pay for Bhushan Power purchase

JSW Steel has sought more time to make payment to banks for Bhushan Power and Steel (BPSL) acquisition, following the announcement of a moratorium by the Reserve Bank of India (RBI) and a steep fall in global steel prices due to the Covid-19 pandemic, say bankers. JSW Steel, which made the winning bid to acquire BPSL, says it remains committed to the acquisition.

JSW offered ~19,700 crore to banks for BPSL, which was largely funded by taking fresh debt. After a long litigation, the National Company Law Appellate Tribunal gave its green signal in February and lenders were expecting a debt resolution in the March quarter. But as the pandemic hit the Indian economy in March, the company decided to take advantage of the RBI’S moratorium on loans and defer repayments.

At the same time, a fresh petition was filed by former Bhushan Steel promoter Neeraj Singal appealing against JSW’S acquisition. It is currently pending in the Supreme Court. The litigation could delay the acquisition till the apex court makes a decision, say corporate lawyers.

“The 10 per cent fall in global steel prices since January has further compounded the problem, making the acquisition a winner’s curse,” says a banker.

Bhushan Power was one of the top 12 companies sent for debt restructuring by banks, following a report prepared by the RBI on top defaulters. BPSL had defaulted on bank debt worth ~48,000 crore.