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NCLT Clears Way For Tata Steel's Acquisition Of Bhushan Steel

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| May 16 , 2018 , 12:44 IST

Tata Steel will now acquire debt-ridden Bhushan Steel as the National Company Law Tribunal approved its resolution plan on Tuesday rejecting the plea filed by employees of Bhushan Steel opposing Tata’s bid.

Last month, the tribunal had reserved its order on the plea that claimed Tata Steel was not eligible to bid under Section 29 (A) of the IBC Code and challenged the decision of the committee of creditors.

Tata Steel’s subsidiary Bamnipal Steel Limited will acquire the majority equity of Bhushan Steel Limited.

A statement from Tata Steel reads, “As per the terms of approved Resolution Plan, Bamnipal Steel Limited (`BNPL'), a wholly-owned subsidiary of Tata Steel, will initially subscribe to 72.65% equity share capital of BSL at face value i.e. at Rs 2 per share, for an aggregate amount of Rs.158.89 crore.”

Bamnipal Steel will be classified as the promoter of Bhushan Steel Limited thus removing present promoters. The company now needs a nod from the Competition Commission of India to initiate the process of acquisition.

In a regulatory filing, Bhushan Steel said that the funds received from the investment will be to the tune of 35,132.58 crores and will be used to settle the existing debts of the company.

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Bhushan Steel is under a debt of 57160 crores. The company has been operating during the moratorium period and has earned significant cash during the period thanks to the recovery of steel sector as per experts. The company sits on a huge inventory as well. It is still unclear if this cash and inventory too will be used to settle the existing debts of the company or go to Bamnipal Steel for free at the cost of the lenders of Bhushan Steel.