The engineering and construction company had bagged a Rs1,205 crore order from Bhushan Steel for construction related work at the latter's Odisha plant in September 2007. The company statement added that the Committee of Creditors (CoC) of Bhushan Steel had taken the decision at a meeting on March 6, and the next steps will be as per the stipulations under the Corporate Insolvency Resolution Process.
Meanwhile, on Thursday at 10:16 hours, the stock of Bhushan Steel was trading at Rs. 45.45 per share, up by 11.95 per cent. Tata Steel was at Rs. 642.30 per share, up 0.88 per cent. The rival bidder for this asset, JSW Steel, had reportedly offered around Rs 29,000 crore.
The company's bid was higher than JSW Steel, which had also bid for the stressed asset through a National Company Law Tribunal-led process.
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Bhushan Steel has an annual production capacity of 5.6 million tons and would significantly boost Tata Steel's annual output, now 13 million tons.
The sale of Bhushan Steel under Insolvency and Bankruptcy Code (IBC) in which Tata Steel has emerged as the highest bidder to acquire a controlling stake, is credit positive because it will help improve banks' asset quality, according to Moody's.
At 559.89 billion rupees ($8.75 billion), Bhushan Steel faces the highest claims among a dozen companies pushed to bankruptcy court past year as part of a government drive to clear a mountain of bad loans choking credit at Indian banks.
Nevertheless, based on media reports, the purchase price could result in a haircut of around 25 per cent for the lenders to Bhushan Steel, said Moody's.