M&A Magazine

Bhushan Steel  was under  Corporate Insolvency Resolution Process  (CIRP) and on May 15, 2018, resolution plan was approved by the  NCLT . On May 18, 2018,  the company was acquired by  Bamnipal Steel Limited (BMSL),  a wholly owned subsidiary of  Tata Steel Limited  and later on renamed it to  Tata Steel BMSL Ltd . Company recently issued its first Annual report post acquisition. We tried to dive into the impact of the resolution plan to the financial, other stakeholders and other aspects through this article. Structuring of the deal As a part of resolution plan, BMSL paid Rs. 35,100 crores to the financial creditors of Bhushan Steels to settle their claims. Amount was infused by way of issue of equity shares and inter-corporate deposits. Detail break-up is as follows: Table 1: Resolution Plan Break-Up (All Figs in ₹ Lacs) Treatment Issue of Shares to BMSL (Rs. 2 each) 15,888.58 Treated as Inter-Corporate Deposit 34,...

In a landmark ruling, the National Company Law Appellate Tribunal ( NCLAT ) has set aside National Company Law Tribunal ( NCLT ) order to liquidate Sterling Biotech . It has also directed that the management should be handed over to its promoters if the dues of creditors are settled. In an oral order, a three-member NCLAT bench presided over by justices SJ Mukhopadhyay and AIS Cheema along with member (technical) Kanti Narahari, set aside the May 8 order of the National Company Law Tribunal’s Mumbai bench and allowed withdrawal of a petition filed under Section 7 of the Insolvency and Bankruptcy Code ( IBC ). In June, the NCLAT had stayed the corporate insolvency resolution process of Gujarat-based Sterling Biotech after its workmen and lenders challenged the NCLT order before the appellate tribunal. The appellate tribunal further directed the resolution professional of Sterling Biotech to manage the company till the conditions of section 12A are complied. Section 12A of the Inso...

CG Power and Industrial Solutions Ltd (“ CG Power ”), which makes power equipment - electrical switchgears have tumbled 70% in the last 3 months on the stock exchanges with news of serious accounting lapses at the company. The stock of the company is brooding at the bourses as to what extent the problems are! From outlook, it seems erstwhile promoters of CG Power used acquisition as a tool for syphoning of money & to hide its losses. In this article, we have articulated how promoters used acquisition as a tool. In March 2019, the Board of Directors of CG Power constituted Operations Committee (“Ops Committee”) with aim of improving stakeholders’ value. However, while working on one of its priority tasks of seeking refinancing, of certain facilities and as part of conducting financial analysis, the Ops Committee was made aware of some unauthorised transactions. Digging further, they came out with some serious accounting lapses. As a result of this, on 10 th May 2019 the CEO ...

Section 232(6) of the Companies Act, 2013 states that the appointed date with respect to a scheme of merger and amalgamation means the date from which the scheme becomes effective. That means the appointed date and effective date of the scheme has to be one and same.  Since there needed some clarity on the subject, the Ministry of Corporate Affairs vide its General Circular dated - 21.08.2019 has issued clarification on the following issues: Whether it is mandatory to indicate a specific calendar date as 'appointed date' in the schemes referred to in the section. Whether the acquisition date' for the purpose of Ind-AS 103 (Business combinations) would be the 'appointed date' referred to in section 232(6). We previously looked at the importance of Appointed Date and Effective Date . Clarification provided by the Ministry Appointed date can be specific calendar date or Event based. If the appointed date is specific calendar date more than one year p...

In one of the largest foreign investments ever to be made in India, Reliance Industries Ltd ( RIL ) has decided to sell 20% stake in its oil business to Saudi Aramco , the world’s largest oil company producing one in every eight barrels of crude oil globally. The deal value is estimated to be around $15 billion --- at an enterprise value of $75 billion -- and money received by RIL will be used partly to pare the company’s debt. This is the fourth divestment announced by the company this year. Also, RIL had signed a pact with BP Plc to form a joint venture in the petroleum retailing business, in which RIL will hold 51% stake and the company and will get Rs 7,000 crore from BP Plc. These two deals further outline RIL’s strategy that it wants to move into the technology sector as a part of the company’s efforts to expand its consumer-facing businesses. Moreover, these two deals, and another one signed earlier to sell stake in its telecom tower arm to Canadian investment firm Brookf...