Bhushan Steel steel surges on lenders' nod to loan recast

NEW DELHI: Bhushan Steel surged 10 per cent to settle at Rs 72.60 on Friday. This was the second day of consecutive gains for
the steel stock after the company informed the exchanges that its lenders agreed to recast its loans of around Rs 30,000 crore.

Earlier in the day, the scrip rose as much as 14.50 per cent to hit the day’s high of Rs 75.50 on the BSE.

The stock had hit its upper circuit limit of 20 per cent in the preceding session, tracking the positive development. The two-day gains for the metal scrip stood at 30 per cent.

The company has been reporting losses for at least five quarters to Q4FY15. Net loss for the March quarter stood at Rs 360 crore due to incremental increase in interest outgo that came in at a whopping Rs 796 crore for the quarter.

A consortium of banks including Punjab National Bank, State Bank of India, Dena Bank and Bank of India has a total exposure of around Rs 30,000 crore in the company.

"About 70 per cent of the lenders have approved the scheme and by the end of this month, it should get closed,” Bhushan Steel's CFO Nittin Johari was quoted saying.

"The sanctions from a few banks are awaited and as soon as the nod is given, the plan will begin," the CFO said.

We have a four-year moratorium on principal repayment. After this, there will be a 21-year repayment period, with a provision to refinance every five years, Johari added.

The scrip has fallen 17 per cent so far this calendar and its market capitalisation has declined by nearly 82 per in the past one year.

On August 7, 2014, the central bureau of investigation (CBI) arrested Bhushan Steel's CMD Neeraj Singal, in connection with Rs 50-lakh bribery scandal involving SK Jain, chairman and managing director of Syndicate Bank.

After the arrest, lenders formed a committee with officials from various banks, which is closely monitoring the functioning of the company. They had also appointed some new directors to the company's board. SBI wanted to bring in a management agency to run the scandal-hit company.