Bhushan Steel's lenders reject its loan Recast Plan

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A consortium of lenders tossed out Bhushan Steel's `46,000-crore loan revamp plan as `unacceptable' and directed it to redo the math as the current plan was loaded against the lenders even as company's prospect was brightening, said three people familiar with the matter.

Banks are demanding that the company agree to the fact that it would be able to repay more loans than its initial plan shows, said those people, preferring anonymity. Rising steel prices would make the company financially healthy and improve its ability to service loans, they said.


The company which owes `46,000 crore to banks, has said just 52% of its loans are sustainable, and the remaining could be converted into equity under the so called S4A, or Scheme of Sustainable Structuring of Stressed Assets.

The S4A norms suggest that banks can restructure loans based on the projected cash flow of the company and keep the sustainable portion of loans as standard loans, and classify the remaining as bad loans and provide for them.

Bhushan steelBSE -0.75 % did not respond to ET's email on the issue. However, a company official, who did not wish to be named, said: “Our financials have improved in last six months and is likely to do well in the coming months too.'' 

Bhushan Steel said in a statement: “We are being considered under S4A because of our improved financials which can help us meet sustainable debt. However, we are working as per the RBI guidelines to ascertain what could be the level of the sustainable debt.“

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