PSL Units File for Bankruptcy With Plan to Sell Assets

The U.S. and North American units of PSL Ltd., an Indian steel-pipe maker for the oil and gas industry, sought bankruptcy protection with a plan to sell assets to Jindal Tubular USA LLC for about $100 million.

PSL-North America LLC and PSL USA Inc., based in Bay St. Louis, Mississippi, each listed assets of more than $50 million and debt of about $130 million in Chapter 11 documents filed today in U.S. Bankruptcy Court in Wilmington, Delaware.

PSL USA, which owns 83 percent of PSL NA, agreed to sell virtually all its assets to Jindal in a deal valued at about $100 million, according to court documents. That offer will set the floor for competing bidders at a court-authorized auction.

The sale process is in the company’s “best interests” and will “maximize the value” of the estate for creditors’ benefit, according to court papers. An auction was proposed for Aug. 13 followed by a hearing two days later to approve the sale.

The debtors suffered losses in three of the last five years, seeing revenue plummet from $217.4 million in 2010 to $36.7 million last year, court filings show.

Mumbai-based PSL Ltd. wasn’t in a position to give its units a lifeline, having to pursue its own restructuring last year in India of about $900 million in debt, according to court documents.

Defective Coil

According to court papers, a defective batch of steel coil, about a third of the 240,000 tons bought to build a 450 mile (724 kilometer) gas-pipeline in Florida and Alabama, caused the units a loss estimated at $30 million. A lawsuit filed in 2011 against the coil supplier, F.J. Elsner, is pending in the Commercial Court of Austria, according to the bankruptcy court filings.

An affiliate of ICICI Bank Ltd. issued about $77.6 million in letters of credit to support bonds from the Mississippi Business Finance Corp. MBFC is owed about $78 million for tax-exempt and variable-tax bonds, according to court papers. A unit of Standard Chartered Plc is owed about $30 million on a term loan.

The PSL units will seek court approval to borrow as much as $11.5 million from ICICI to help fund operations while they pursue the sale, according to court documents.

The units’ 20 largest unsecured creditors are owed about $18.3 million, according to court papers. Their parent is owed about $4.8 million and a CSX Corp. unit is owed about $4.1 million.

The lead case is In re PSL-North America LLC, 14-bk-11477, U.S. Bankruptcy Court, District of Delaware (Wilmington).

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