Five Companies Firm Up Bids For Bhushan Steel

Five strategic investors are likely to submit final resolution plans for debt-ridden Bhushan Steel Ltd, reinforcing the view that insolvent Indian steel firms will see strong buying interest.

Tata Steel Ltd., ArcelorMittal, Vedanta Group, SAIL and JSW Steel Ltd. are in advanced stages of putting together a resolution plan for troubled steelmaker Bhushan Steel Ltd, two bankers in the know have confirmed.

All five bidders have concluded their due diligence in the New Delhi-based steel company, the bankers said, requesting anonymity. The insolvency resolution professional of Bhushan Steel, Vijaykumar V Iyer, extended the deadline for submission of resolution plans to Jan. 18 from Dec. 23 earlier, according to a notification on the company’s website.

"We can confirm that members of our management team have conducted due diligence on steel assets available through the current insolvency process. We have no further comment at this time," a spokesperson for ArcelorMittal said in response to a BloombergQuint query. Iyer and the other four bidders did not respond to queries sent on Tuesday.

Bhushan Steel is one of the largest stressed assets being resolved under the Insolvency and Bankruptcy Code (IBC). According to data released by the company, it owes its financial creditors more than Rs 55,000 crore in debt, while operational creditors are owed more than Rs 3,000 crore. For the quarter ended September 2017, Bhushan Steel reported total income of Rs 4,325 crore and a net loss of Rs 467 crore.

BloombergQuint could not ascertain the value ascribed by potential investors to Bhushan Steel.

In June 2017, the Reserve Bank of India had created a list of 12 accounts for immediate admission under IBC. Five of these have metal businesses including Essar Steel Ltd, Bhushan Steel, Bhushan Steel & Power Ltd, Monnet Ispat & Energy Ltd, Electrosteel Steels.

On Tuesday, Kolkata-based Electrosteel Steels Ltd said four companies – Tata Steel Ltd, Vedanta, Renaissance Group and Edelweiss Alternative Assets Advisory Plc – have submitted their resolution plans for the company. Bankers told BloombergQuint on the condition of anonymity that the bids for Electrosteel Steels would be evaluated this week. The Vedanta Group has submitted a bid worth Rs 4,500 crore for Electrosteel Steels, the highest among the four bidders, The Economic Times first reported on Tuesday citing unnamed sources. At that prices, bankers would need to take a haircut of roughly 50 percent.

Bankers are hopeful that they will be able to limit the haircut needed atleast in the case of insolvent steel firms. In a conversation with BloombergQuint on December 29, State Bank of India chairman Rajnish Kumar said that there is ‘considerable’ interest in large insolvent firms, ‘particularly for assets in the steel sector.’

“Every asset has its fair enterprise value. It is my firm belief, that creditors will be able to realise the fair value of the asset,” Kumar told BloombergQuint while adding that most of the large accounts would get resolved between January-June 2018.