Bhushan Steel looking to sell non-core assets as IFCI invokes its pledged shares

Debt-ridden Bhushan Steel is looking to sell its assets amidst reports that the company's lenders are looking to put the company on the block to recover their loans.

While Bhushan Steel said the report was "completely false and baseless", but said in a filing with the Bombay Stock Exchange (BSE) that financial institution IFCI Ltd has invoked one lakh shares in the company pledged by its promoter Neeraj Singal.

Singal is also vice chairman and managing director of Bhushan Steel.

Bhushan steel, meanwhile, is reported to have appointed ICICI Securities to find a buyer for three or more of its oxygen plants in Odisha in order to raise Rs1,000 crore.

The sale of non-core assets by Bhushan Steel is also reported to be at the behest of its lenders. But the sale would be done under a leaseback agreement, where the buyer will have to first supply the oxygen produced at the plant to Bhushan and the excess production can be sold in the market.

In August, a consortium of lenders led by Punjab National Bank decided to conduct a forensic audit of Bhushan Steel and appoint an independent auditor to monitor the cash flow on daily basis to ensure their Rs40,000-crore exposure doesn't turn bad.

Bhushan Steel has a net debt of Rs35,142 crore with around Rs11,034 crore of debt maturing in the next four financial years.

Bankers had sanctioned an additional Rs6,900 crore in April and the account is classified in the special mention account (SMA) category where the interest is overdue by 0-30 days. The loan sanctioned in April was approved at a joint lenders' forum (JLF) where lead banks SBI and PNB were present.

The firm, which has three plants in Odisha, Maharashtra and Uttar Pradesh, has report a net loss of Rs141.63 crore for the three months to June.

Bhushan Steel has strategic investments totaling $50 million, including through its subsidiary Bhushan Steel (Australia) in Bowen Energy in which it has 100-per cent stake.

Besides, the company has strategic investments in Orissa Sponge & Iron Steel, in which it has 17.12 per cent stake. Bhushan Steel was allocated 325 million tonnes of coal reserves in February 2006 in Patrapara in Odisha.