MUMBAI: Tata Steel may acquire three-fourths of Bhushan Steel’s share capital by an equity infusion in it while lenders would also raise their stake by converting a part of the outstanding loans into stock, sources aware of the resolution plan told ET.
“Tata Steel will be paying Rs 180 crore to acquire 75% of the paid up share capital by issuing 120 crore new shares as part of its plan to salvage the debt-laden steel company,” sources in the know said.
Tata Steel will also have room to buy an additional 4,500 crore at Rs 2 a piece that may take its holding to 98%. The issue of new shares will take the total share outlay to 5.3 times the existing number of scrips.
Lenders who already hold 6.5% by way of shares pledged to them by the promoters, will also add another 6.5% to their kitty by converting Rs 15 crore of loans into equity. In the event of additional purchase of shares by Tata Steel, the remaining 2% will be held between lenders, shareholders and promoters.
However, if Tata Steel chooses to not exercise its right to buy additional shares, Bhushan Steel’s shareholding pattern will feature 75% to Tata Steel, 13% to lenders, 10% to public and remaining 2% to promoters.
For the quarter ending March 2018, the promoter and promoter group held 43.9% of the share capital, down from 57.82% at the end of December.
The rest was held by public whose shareholding increased from 42.18% in December to 56.1% for March. The intrinsic value of shares in a distressed asset becomes zero after the announcement of haircuts by secured lenders.
“Attractiveness of the asset for Tata Steel stems from an easy grab of 5.6 mt readymade steelmaking capacity along with 2,000 acres in a country where land acquisition is a nightmare,” said a source.