Tata Steel has offered to pay a little more than 350 billion rupees ($5.4 billion) to lenders of Bhushan Steel & Power to take over the bankrupt steelmaker, a source with direct knowledge of the deal said.

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Bhushan Steel’s panel of creditors approved the deal on Thursday, pending other regulatory clearances, the company said in a stock exchange filing on Friday without disclosing financial details.

Tata Steel plans to inject more than 90 billion rupees into Bhushan Steel to modernise and ramp up its facilities, the source said, declining to be named because the details had not been made public.

A spokesman for the company declined to comment on the deal value and planned investment in Bhushan Steel.

Bhushan Steel is among a dozen companies pushed to bankruptcy court last year amid a government drive to clear a mountain of bad loans choking credit at Indian banks.

The company, which was facing $8.6 billion of claims from banks and other creditors, had received bids from Tata Steel and top Indian steelmaker JSW Steel in an auction conducted by a court-appointed administrator.

Taking over Bhushan Steel will help Tata Steel to increase capacity in India and gives the company an edge in the fast-growing automotive steel market.

With annual steelmaking capacity of 5.6 million tonnes, Bhushan Steel is one of the biggest producers of cold-rolled steel products used to make cars and consumer goods such as refrigerators and washing machines.

Shares in Tata Steel closed 2.5 percent down on Friday in a Mumbai market that fell by 1.2 percent.

First Published:Mar 24, 2018 10:01 AM IST