Ending over three years of uncertainty, JSW Steel will pay ₹19,350 crore into the escrow account to be opened with Punjab National Bank on March 25 for taking over the stressed Bhushan Power and Steel.
As part of funding the acquisition, JSW Steel is expected to raise about ₹3,000 crore later this week, sources said.
The lenders of BPSL agreed to the company’s plan to deposit the money even as the Supreme Court is hearing the Enforcement Directorate’s right to attach the asset as part of its investigation.
The Enforcement Directorate had issued a provisional order of attachment of BPSL’s assets valued at ₹4,025 crore in October 2019 and objected to the applicability of Section 32A of the insolvency law to the JSW-Bhushan deal.
The Section 32A of Insolvency and Bankruptcy Code provides immunity to the Corporate Debtor for the offence committed prior to commencement of Corporate Insolvency Resolution Process once the Resolution Plan has been approved by Adjudicating Authority.
JSW Steel has agreed to make the payment by March 25 and the amount will be refunded in two months if the Supreme Court order goes against closure the deal, said banking sources.
When contacted, a senior JSW Steel official said they are constantly in touch with the lenders of BPSL and are not in a position to comment now.
The entire episode of BPSL insolvency proceedings has taken many twist and turns, throwing up fresh bid to block JSW Steel’s bid.
In a latest attempt, the promoter of BPSL Sanjay Singhal has filed a petition in the Supreme Court this month against the lenders accepting the money from JSW Steel before the final judgement by the Supreme Court.
However, the lenders are going ahead with the proposal of JSW Steel as the Apex Court has not stayed the NCLT approval of JSW Steel’s resolution plan.
JSW Steel had proposed to repay financial creditors ₹19,350 crore against their claims of ₹48,000 crore, leading to a recovery of 41 per cent. Bhushan Power was one of the first in the list of a dozen defaulters identified by RBI to be sent to NCLT for resolution in July, 2017. The NCLT had cleared JSW Steel’s resolution plan for BPSL in September 2019.