Tata Steel Is The Only Bidder Left In Fray For Bhushan Energy

- Jun 26, 2018-

Economic Times, citing two people familiar with the development, reported that Tata Steel, which bought Bhushan Steel the bankrupt promoter of power company Bhushan Energy, is now the sole bidder in the fray for the latter too. As per report “Tatas have offered INR 500-Rs 600 crore to settle the loans of about INR 2,500 crore of Bhushan Energy, the second company owned by Neeraj Singhal that is facing bankruptcy proceedings. Singhal’s flagship Bhushan Steel was sold to Tata Steel last month under the bankruptcy law.”

Bhushan Energy’s plant is located within the premises of Bhushan Steel’s plant at Meramandali, Dhenkanal district in Odisha and was built primarily to power the steel plant and therefore makes economic sense for Tata to bid for it.

Development comes in the backdrop of differences that have emerged between the resolution professionals or RPs of Bhushan Energy and Bhushan Steel regarding the power purchase contract between the two companies. Bhushan Energy, which had a power supply agreement with Bhushan Steel, had objected to Tata’s plan to acquire the company. It objected on grounds that the Tata’s proposal talked about terminating power purchase agreement with Bhushan Energy, which was constructed only to meet the demands of Bhushan Steel’s integrated plant. Bhushan Steel has entered into two power purchase agreements with Bhushan Energy for supply of power until September 2024 and December 2024 respectively. As per the agreement between the Bhushan Steel and Bhushan Energy, there was no provision to terminate this agreement.

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