Bhushan Steel is locked in the 5% UC today morning at Rs.27.65; it hit the UC the moment it opened for trading.
The unconfirmed news today is that Tata Steel is seeking out a Rs.11,500 crore loan which will help it fund the purchase of assets from Bhushan Steel.
There is news that it is in talks with banks for a six-month bridge facility to be used to refinance with a loan that would have a 15 years maturity.
Moreover, Tata Steel yesterday made it clear that it plans to take all employees of Bhushan Steel on board and has no plans to delist the stock from the exchanges.
Tata Steel plans to pump Rs 18,000 crore as equity for the Rs 35,200 crore asset.
Bhushan Steel’s debt stands at Rs.56,000 crore and was one of the biggest defaulters identified by the Reserve Bank of India last year under its new bankruptcy law.
The process as explained by our Editor, Mr.SP Tulsian - New Promoter, who will come in, (Tata Steel in case of Bhushan Steel), will eventually hold 75% stake in the company. This means, equity dilution of 300% will happen, by issue of fresh shares to Acquirers. Existing Promoters' equity in the company will be invoked by the lenders, to the extent it is pledged with them. Non Promoter equity held by Institutional investors and Public in the company, will exist as it is and will remain unaffected in any manner whatsoever and will neither get written off nor squeezed, as no such provisions exist under any law of the country. In Bhushan Steel, Promoters are seen holding 58% and 72% of that is pledged with the lenders, which gives them an effective ownership of about 42%, which will get shrunk to 12.2% of enlarged equity to be held by the lenders, on equity dilution as stated above.