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Tata Steel completes acquisition of Bhushan Steel stake

Tata Steel Ltd. said May 18 that it completed the previously announced acquisition of a majority interest in Bhushan Steel Ltd.

The National Company Law Tribunal of India recently greenlighted Tata's purchase of the stake in the debt-laden steelmaker. The company has also received approval from the Competition Commission for the transaction.

Tata unit Bamnipal Steel Ltd. subscribed to a 72.65% equity stake in Bhushan Steel at a face value share price of 2 Indian rupees apiece for a total of 1.59 billion rupees. The company is also settling a 352-billion-rupee debt with financial creditors and will pay another 12 billion rupees over 12 months to Bhushan Steel's operational creditors.

Bamnipal will raise a bridge loan of 165 billion rupees to help fund the acquisition, while Tata will invest the remainder in the unit. The bridge loan will be replaced by longer-term debt over a period of time.

According to a recent Bloomberg News report, Tata was said to be in talks with several Indian banks for a six-month bridge facility.

The acquisition of Bhushan Steel, which has a capacity to produce around 5.6 million tons of crude steel, provides Tata Steel with an inorganic growth opportunity to grow in its existing line of business and leverage operating synergies, the Indian steel giant added.

As of May 18, US$1 was equivalent to 68.02 Indian rupees.