Delays in deciding the Bhushan Power & Steel (BPSL) case will only hurt the affected lenders and the bidder, a top JSW Steel executive told ET, even as the Enforcement Directorate approached the top court against a judicial order that had approved the JSW bid for the debt-laden steelmaker. “The case must be resolved quickly as this is of public interest, the banks are losing around Rs 20,000 crore and a lot of things can be done strategically that can improve the company,” the executive said, declining to be named.
On February 17, NCLAT approved JSW Steel’s bid for BPSL under the new amendment under section 32(A) of the Indian Bankruptcy Code that provides immunity to the new owners from ongoing criminal proceedings against erstwhile promoters of the company. JSW Steel’s capacity would have gone up to 26 million tonnes with the acquisition of the Odisha-based BPSL, which has an integrated steel making capacity of around 3.5 million tonnes. However, ED on September 21 said that while investigating, it found documents that show ‘suspicious transactions’ between JSW Steel and Bhushan Power. The case is listed for hearing on September 24.
“NCLAT has clearly given its direction through its order; ED is just repeating the same complaints, except that they have added some investigation angle to it and found something suspicious…to further delay the deal,” the executive added. Officials at the ED could not be reached immediately. With the uncertainty prevailing over the acquisition of the asset, the company is also incurring heavy costs. “We have to look at both intangible and tangible costs. Due to the uncertainty of the transaction of such a big size, there will be a beating on the market price, on the overall rating and in turn the loans will have higher interest rates,” the executive said.
Despite incurring interest cost on the asset and higher intangible costs, the deal is still on the table, the official said. “There is no option of giving up on this deal. For a company of our stature, we don’t have an option to walk away from this deal. We want to complete the transaction at the earliest,” he added.
Source: Economic Times