Tata Steel Offers Rs.36,400 Cr. For Acquiring Bhushan Steel

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Tata Steel has offered to shell out Rs 36,400 crore for its acquisition of Bhushan Steel, the debt-ridden 5.6-mtpa steel firm promoted by the Singal family. This includes Rs 35,200 crore to be paid to Bhushan Steel’s financial creditors and Rs 1,200 crore to its operational creditors. The troubled firm owes Rs 56,080 crore to its financial creditors and Rs 3,488 crore to operational creditors. This means if Tata Steel’s resolution plan is approved by the National Company Law Tribunal (NCLT) and subsequently by the competition commission, which now appears to be just a formality, Bhushan Steel’s financial creditors including State Bank of India, Punjab National Bank and others will have to take a 37% haircut (a haircut is the difference between the market value of an asset used as loan collateral and the amount of the loan. The amount of the haircut reflects the lender's perceived risk of loss from the asset falling in value or being sold in a fire sale.), while its operational creditors will have to take a 66% hit on their exposure.