(Reuters) - India’s Tata Steel Ltd said on Friday it had completed the acquisition of a 72.7 percent stake in Bhushan Steel Ltd, which was in bankruptcy court over unpaid loans.
As part of the deal, a unit of Tata Steel is paying 352.33 billion rupees ($5.18 billion) to Bhushan Steel’s creditor banks. It will also pay Bhushan Steel’s operational creditors, such as vendors, another 12 billion rupees over 12 months.
The Tata Steel unit will raise a bridge loan of 165 billion rupees to help fund the acquisition, while Tata Steel is investing the remainder in the unit, Bamnipal Steel.
Bamnipal has appointed members to Bhushan Steel’s board, Tata Steel said in a statement.
Bhushan Steel, which was among a dozen companies pushed to bankruptcy court last year amid a government drive to clear a mountain of bad loans choking credit at Indian banks, has an annual steel making capacity of about 5.6 million tonnes.
Taking over Bhushan Steel will help Tata Steel to increase its capacity in India and gain an edge in the fast-growing automotive steel market.
($1 = 68.0500 Indian rupees)
Reporting by Jessica Kuruthukulangara in Bengaluru; Editing by Subhranshu Sahu