According to reports published in national media, LN Mittal-led ArcelorMittal has submitted an expression of interest (An expression of interest (EOI) is an informal offer made by a strategic or financial buyer for the purchase of a business. The primary purpose is to suggest a valuation range that a buyer is willing to pay for a company. Investment bankers usually request an EOI in their bidding process to separate all potential buyers into a smaller, more... More) for Bhushan Steel though there has been no official confirmation on the latest development.
Following the media report, Bhushan Steel share price rallied as much as 20 percent Monday morning.
The Bhushan Steel owes nearly Rs 42,000 crore to lender banks and was admitted into National Company Law Tribunal. The Central Government has constituted National Company Law Tribunal (NCLT) under section 408 of the Companies Act, 2013 (18 of 2013) w.e.f. 01st June 2016. In the first phase the Ministry of Corporate Affairs have set up eleven Benches, one Principal Bench at New Delhi and one each Regional Benches at New Delhi, Ahmedabad, Allahabad, Bengaluru,... More in July this year.
The steel behemoth has inked A memorandum of understanding (MoU) is an agreement between two (bilateral) or more (multilateral) parties. It expresses a convergence of will between the parties, indicating an intended common line of action. It is often used in cases where parties either do not imply a legal commitment or in situations where the parties cannot create a legally enforceable agreement... More in 2005 with Jharkhand to enter India for the 12 MT plant. Later, two more pacts were signed by the company with Odisha and Karnataka for the Greenfield projects.
Apart from the three companies, a private equity player, an investor from the UAE, a mid-sized domestic steel company and the existing promoter, Sanjay Singal, have also submitted EOIs (expressions of interest).
The unlisted Bhushan Power & Steel has a steel-making capacity of three million tonnes across Odisha, West Bengal and Chandigarh. A hot-rolled steel facility is in Odisha and cold-rolling facilities are in Kolkata and Chandigarh. Bhushan also has a captive power plant, a pellet plant and an iron ore beneficiation plant.
Bhushan’s debt in FY16 stood at Rs 37,248.26 crore, net sales were at Rs 7,699.81 crore and losses were at Rs 2,435.95 crore.
Bhushan Power & Steel ran into trouble after its licences for iron ore and coal mines were cancelled. The company was allotted a coal mine, with reserves of around 250 million tonnes, but this was deallocated in 2014. The iron ore mines were committed by the Odisha government. Two mines were allocated in 2012 and 2014 after intervention of the Supreme Court . Subsequently, the amended Mines and Minerals (Development and Regulation) Act was passed in 2015. As a result, Bhushan’s iron ore mines were also cancelled.