Synopsis

JSW Steel's unit, JSW Kalinga Steel, is raising approximately ₹9,500 crore via unsecured, zero-coupon bonds to finance its joint venture with JFE Steel for the Bhushan Power & Steel business. The five-year non-convertible debentures, rated AA, will be redeemed at a premium, implying yields of about 8.5%.

Mumbai: JSW Steel unit plans to raise about ₹9,500 crore through rupee-denominated bonds, sources told ET, as part of a financing package for its joint venture with Japan's JFE Steel at the Bhushan Power & Steel (BPSL) business acquired in a bankruptcy bid.

JSW Kalinga Steel, said those cited above, would issue unsecured, zero-coupon, five-year non-convertible debentures in two tranches, with base issues of ₹6,000 crore and ₹3,500 crore, respectively.

The bonds will be redeemed at a premium, implying yields of about 8.5%, with repayment made as a bullet payment at maturity in March 2031. The notes will carry put and call options at three and four years and are rated AA by Crisil.

Anchor investors have already been allocated ₹1,800 crore in Series I and ₹1,050 crore in Series II, according to the sources.

Agencies

FUNDS FOR BPSL BIZ JSW Kalinga to issue NCDs in 2 tranches worth ₹9,500 crore

The fundraising is part of a broader financing structure tied to JSW Steel's restructuring of BPSL and the formation of a 50:50 joint venture with JFE Steel.

The bonds will be backed by joint letters of comfort from JSW Steel and JFE, a 49% pledge over shares of JSW Sambalpur Steel Ltd, and a floating charge over JSW Kalinga's bank accounts, said the sources cited above.

Proceeds from the bonds will be used by JSW Kalinga to extend shareholder loans to JSW Sambalpur Steel, which will acquire the steel business of BPSL through a slump sale.

A JSW spokesperson did not immediately respond to request for comment.

The Supreme Court late September last year overturned its own May 2 order that had directed liquidation of BPSL and instead upheld JSW Steel's ₹19,700-crore resolution plan for the debt-ridden company. With this verdict, the apex court effectively rejected challenges raised by BPSL's former promoters and certain creditors.

JSW Steel had acquired BPSL through the insolvency process in 2021.

The transaction values BPSL at an enterprise value of about ₹53,000 crore.

As part of the structure, JSW Sambalpur will raise about ₹12,000 crore of operating company debt backed by its assets and cash flows, while JFE will invest ₹7,875 crore for a 25% stake in JSW Kalinga and buy another 25% from Piombino Steel for the same amount, creating a 50:50 joint venture with JSW Steel.

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