Bhushan Steel gets lenders' approval for loan restructuring

6 June 2015

Bhushan Steel Ltd (BSL) today said the Joint Lenders Forum has approved its plan for a long-term restructuring of the loans.

In a BSE filing, the firm said: "On December 15, 2014, RBI announced a scheme for long-term structuring of loans in line with Cash Flows.

"The Joint Lenders Forum have agreed to extend loans of BSL for a tenure of 25 years under the said scheme. However, the respective authorities of the banks have to approve the scheme, which is under process with the respective banks."

Reacting to the news, shares of Bhushan Steel breached the upper circuit. The scrips rose almost 20 per cent to Rs 60.50 apiece at the BSE.

The filing further said: "We have received the sanction from some banks only. However, the sanction from rest of the Banks are still awaited."

A consortium of bankers led by Punjab National Bank (PNB) has a total exposure of about Rs 40,000 crore in the company.

Besides PNB, the other banks include State Bank of India, Canara Bank, Bank of India and Dena Bank.

An extension of maturity will help the banks in making lower provision for the loan given to the debt-ridden steel manufacturer.

In August last year, Bhushan Steel Vice Chairman and Managing Director Neeraj Singal was arrested by the CBI in an alleged cash-for-loan scam involving the then Syndicate Bank chairman and managing director S K Jain, who was later suspended by the government.

After the arrest, lenders formed a committee with officials from various banks, which are closely monitoring the functioning of the company. They had also appointed some new directors to the company's board.