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Bhushan Steel promoter seeks recast of debt under S4A scheme - Report

2018-02-01

Economic Times reported that in a desperate bid to salvage his company from going under the hammer next week, Neeraj Singhal, vice chairman of Bhushan Steel, has written to all lenders to consider restructuring the INR 44,000 crore debt under the Sustainable Structuring of Stressed Assets (S4A) mechanism by dividing the debt into sustainable and unsustainable parts with no haircut whatsoever even at this stage.

The letter, written on January 29, alleges that the company was wrongly dragged into IBC under the National Company Law Tribunal despite its debt restructuring mechanism under S4A was on the last lap.

Mr Singhal wrote “The lenders had undertaken a series of due diligence exercises and forensic studies by agencies as diverse as MN Dastur (TEV Study), Deloitte (4 years forensic audit) "and found no malfeasance on promoters and the company". The Deloitte report, according to the Bhushan management, was further vetted and confirmed by the lender's legal counsel Shardul Amarchand Mangaldas in the steering committee meetings held in December 2016 and further accepted by the joint lenders forum in a meeting dated December 5, 2016. The proposal to restructure apparently had the blessings of most lenders.”

Mr Singhal added “It appears the above facts and status of the debt resolution plan was not noted by the RBI including the name of company in list of first 12 accounts for initiating insolvency proceedings."

Mr Singhal argues that barring Tata Steel and JSW, most mills have been under stress, so it is not a promoter/company problem.

More importantly, in case of debt restructuring under the S4A scheme, there is virtually no loss to lenders unlike the bankruptcy proceedings under IBC where banks are being forced to sell companies at huge haircuts.

The promoters own 57.82% of the company. Of which 71% is pledged with banks and other financial institutions. The current market cap of Bhushan Steel is Rs 1,159.74 crore.

Source : Economic Times