Banks hopeful of closing Bhushan Power-JSW Steel deal by March 31

The National Company Law Appellate Tribunal had granted immunity to JSW Steel from any prosecution emanating from past offences of the promoters of the company under Section 32A of the Insolvency & Bankruptcy Code last year. However, the Enforcement Directorate had then moved the apex court, arguing that the NCLAT had no jurisdiction to unfreeze and approve the sale of an asset attached by the investigating agency, sought to scrap the sale of BPSL to JSW approved by NCLT in 2019. The ED has attached assets worth over Rs 4,025 crore of BPSL in connection with its money laundering probe linked to an alleged bank loan fraud by the company’s former owners.

“The voting will happen over the next one week, and we are targeting to close this deal for once and for all by March 31st,” said an official from one of the largest lenders to BPSL. Most of the lenders to Bhushan Power are on-board with JSW Steel’s proposal and willing to consider the escrow arrangement to close the deal at the earliest, said this person.

“We are just sorting out issues like how holders of security receipts will return the money which they would have converted into dollars back to JSW Steel if and when the need arises, and so on… By next week we should have answers from most banks and ARCs on whether they are agreeable to close the transaction,” said an executive from a large public sector bank.

JSW Steel is equally keen to close the transaction at the earliest to reap the benefits of the rising steel prices and is awaiting the lenders' response to take ahead the proposed acquisition.

JSW Steel had proposed to repay financial creditors Rs 19,350 crore against their claims of Rs 48,000 crore, entailing a recovery of 41.3 percent, as per its resolution plan. Bhushan Power was one of the first in the list of a dozen defaulters identified by RBI to be sent to NCLT for resolution. The NCLT had cleared JSW Steel's resolution plan for BPSL in Sep 2019, but the case has seen been stuck in courts.

SBI is the largest lender to Bhushan Power and stands to recover over Rs 4000 crore. SBI had admitted claims of Rs 9825 crore against the company, PNB Rs 4399 crore, ARCE ARC Rs 5257 crore, Canara Bank Rs 2244 crore and so on.