Bhushan hikes Orissa Sponge stake

New Delhi-based Bhushan Steel is continuing its stake build-up in the beleaguered Orissa Sponge Iron and Steel (OSIL).

The steelmaker has bought over 1% stake in the company in three days starting May 4.

 The company is still awaiting Securities & Exchange Board of India’s (Sebi) nod to commence its open offer. The offer was earlier supposed to begin on April 24 and end on May 13.

Nittin Johari, director (finance), Bhushan Steel, told DNA Money, “The open offer hasn’t started till now as there hasn’t been any news from Sebi on the matter. The Securities Appellate Tribunal, on April 16, had clearly said that there is no need to pass an interim order on the subject. Sebi, however, said it will continue to investigate the matter and will arrive on a judgment soon.”

The open offer cannot commence unless Sebi gives its nod.

Bhushan Energy, a subsidiary of Bhushan Steel, under whose name the open offer has been announced, has been buying shares of OSIL from the open market.

From March 3 to May 12, Bhushan Energy has acquired over 6% stake in OSIL through open market purchases.

In three days beginning May 4, the company bought 1.16% stake, or 3,10, 996 shares at an average of Rs 330.02 per share. On May 12, Bhushan Energy bought 43,000 shares of OSIL, or 0.16% from the open market.

Johari said, “As per Sebi guidelines, after announcing an open offer, the company is authorised to buy shares of the target company from the open market. The open offer is approved or not doesn’t matter,” adding, “If we buy shares at more than the offer price, then we have to revise the open offer price.”

Johari said the company was waiting for Sebi’s okay so that it could go ahead with the plans. “Volumes to buy the shares will come from the open offer route only. Right now, we are buying in small quantities of whatever is available in the market.”

Bhushan Steel also holds 35 lakh warrants of OSIL which it bought from Delhi-based realtor Unitech in January. The company had bought the 9.5% stake that Unitech held in OSIL.

Johari said Bhushan Steel has sent “three to four reminders” to OSIL, asking the company to convert the warrants in Bhushan Steel’s favour. “But they haven’t done that so far,” he said, adding, “The 35 lakh warrants equal to 11.5% stake in the extended equity base of OSIL and we are ready to pay Rs 54 crore for the warrant conversion. However, the management is not converting them.”