Global investors line up for stake in Bhushan Steel
sourcelivemint.com
time2017/08/07
Debt-laden Bhushan Steel Ltd, which has been referred to the National Company Law Tribunal (NCLT) for insolvency proceedings, has caught the eye of several financial investors.
According to at least two people aware of the developments, these include a joint Piramal Enterprises Ltd-Bain Capital Credit platform to invest in distressed assets, AION Capital, Oaktree Capital and Lone Star Funds.
“Of the various cases that have been referred to NCLT under the insolvency and bankruptcy proceedings, special situations investors such as Piramal-Bain, Aion, Oaktree and Lone Star have shown the strongest interest in Bhushan Steel,” said one of the persons cited above, requesting anonymity as he is not authorized to speak to reporters.
Last week, Mint reported that Asia-focused special situations investor SSG Capital Management, too, had evinced interest in acquiring a stake in the company.
“Steel is the first sector which could see the first real deal among the 12 cases notified by RBI under stress. Bhushan Steel, in particular, is seeing a lot of interest from financial investors,” said the first person mentioned above.
Bhushan Steel’s total debt was around Rs42,355 crore on 31 March. The company has a steel production capacity of 5.6 million tonnes per annum (mtpa) and produces various varieties of steel products such as hot rolled coil, galvanized coil and sheet, colour coated coils, high tensile steel strips, precision tubes and coated pipes amongst others.
On 26 July, NCLT allowed banks to initiate insolvency proceedings against Bhushan Steel, Mint reported.
The petition for launching the insolvency process against Bhushan Steel was filed by the country’s largest lender, State Bank of India (SBI), the lead bank of the consortium of lenders. Since the plea has been admitted by NCLT, there is a 180-day timeline to decide on a resolution plan in accordance with the Insolvency and Bankruptcy Code. SBI has claimed recovery of Rs4,295 crore from Bhushan Steel and $490 million for foreign currency loan.
According to the second person cited above, these funds are tracking the developments in the Bhushan Steel insolvency proceedings. “An interim resolution professional has been appointed and is in the process of assessing the claims of various financial and operational creditors. They are keenly following the process and will bid for the asset if an appropriate resolution plan is formalized,” he said.
Lone Star, Aion and Oaktree declined to comment.
Emails sent to Neeraj Singhal, promoter and chief executive officer of Bhushan Steel, were not answered.
“We do not comment on market speculation,” a spokesperson for Piramal group said.
Among financial investors keen on Bhushan Steel, Aion and SSG, in particular, are aggressively scouting the distress asset landscape for acquisition targets.
Last month, The Economic Times reported that Aion Capital and SSG Capital are eyeing a controlling stake in debt-laden textiles firm Alok Industries Ltd that owes around Rs23,000 crore to lenders. Earlier in January, the paper had reported that Aion was also in talks with troubled steel maker Uttam Galva Steels.
Last year, billionaire Ajay Piramal-led Piramal Enterprises Ltd announced a $1 billion distressed asset investment platform in association with private equity fund Bain Capital Credit.
SSG on the other hand is raising its largest fund till date, preparing a war chest to help it tap the bad loan opportunity. The special situations investment firm founded by former Lehman Brothers executives, is raising close to $2 billion across two Asia-focused funds, Mint reported on 24 July.
The firm is also looking to set up an investment vehicle in India to tap this opportunity, Mint reported last week.
Founded in 2009 by Edwin Wong, Andreas Vourloumis and Shyam Maheshwari, SSG Capital Management has a focus on China, India and South-East Asia.