March 23, 2018 / 3:57 AM / a month ago

Tata Steel offers $5.4 billion to take over bankrupt Bhushan Steel: source

MUMBAI (Reuters) - Tata Steel has offered to pay a little more than 350 billion rupees ($5.4 billion) to lenders of Bhushan Steel & Power to take over the bankrupt steelmaker, a source with direct knowledge of the deal said.

A man walks past a screen displaying Tata Steel logo before the start of a news conference in Mumbai, May 25, 2016. REUTERS/Danish Siddiqui/Files

Bhushan Steel’s panel of creditors approved the deal on Thursday, pending other regulatory clearances, the company said in a stock exchange filing on Friday without disclosing financial details.

Tata Steel plans to inject more than 90 billion rupees into Bhushan Steel to modernise and ramp up its facilities, the source said, declining to be named because the details had not been made public.

A spokesman for the company declined to comment on the deal value and planned investment in Bhushan Steel.

Bhushan Steel is 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.

A labourer works at a Tata steel iron godown in Chandigarh November 9, 2012. REUTERS/Ajay Verma/Files

The company, which was facing $8.6 billion of claims from banks and other creditors, had received bids from Tata Steel and top Indian steelmaker JSW Steel in an auction conducted by a court-appointed administrator.

Taking over Bhushan Steel will help Tata Steel to increase capacity in India and gives the company an edge in the fast-growing automotive steel market.

With annual steelmaking capacity of 5.6 million tonnes, Bhushan Steel is one of the biggest producers of cold-rolled steel products used to make cars and consumer goods such as refrigerators and washing machines.

Men ride their bicycles in front of the Bhushan Steel plant in Odisha August 18, 2014. REUTERS/Stringer/Files

Shares in Tata Steel closed 2.5 percent down on Friday in a Mumbai market that fell by 1.2 percent.

($1 = 65.0050 Indian rupees)

Reporting by Devidutta Tripathy; Additional reporting by Promit Mukherjee and Rajendra Jadhav in Mumbai, and Tanvi Mehta in Bengaluru; Editing by David Goodman

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