Binani Cement lenders vote for UltraTech

Bankers led by State Bank of India (SBI) have unanimously voted in favour of UltraTech’s bid for the Rajasthan-based Binani Cement. UltraTech will pay Rs 7,960 crore for the unit  to get a strong foothold in the western region.  

A senior banker said, “There was a unanimous voting in favour of the UltraTech offer. The intention of the IBC is to maximise the returns. This bid allows us to get the best returns. Bankers have funded the asset, so it is only fair that we get back our dues.”

Bankers say that the UltraTech (offer) was far superior with the resolution plan being a very sustainable one.” It also takes care of all the creditors - secured and unsecured, and includes Rs 350 crore of working capital to resume operations at the plant,” the banker added. 

However, rival bidder, Rajputana Properties, a subsidiary of  Dalmia Bharat which was voted as the highest bidder initially has now approached the Supreme Court challenging UltraTech’s eligibility.  The apex court will hear the company’s appeal  on June 4 .

The meeting was attended by bankers and representatives from UltraTech. However, representatives from the Dalmia were absent after the  company had requested the CoC and the resolution professional to desist  from convening the meeting until Supreme Court hears the case. 

Another senior banker said, “But the last word on the deal will be from the Supreme Court. Dalmia’s petition will be heard by the court. We will wait for it” 

“Now the UltraTech offer has to be accepted and approved by the NCLT (National Company Law Tribunal) and NCLAT (appellate tribunal) where a few appeals are pending. If the courts approve the deal it is a win-win for all the parties concerned. Everyone’s dues are taken care of,” said another banker.

After the UltraTech revised its bid, Dalmia was given time to revise its bid but the company  refused to do so, saying that it was following the process set under the Insolvency and Bankruptcy Code (IBC) 2016 and was selected as the highest bidder. The company also approached the NCLT and the National Company Law Appellate Tribunal to appeal against UltraTech’s move to revise its first bid. 

Dalmia’s contention was that the both Binani Cement and the UltraTech are acting in concert, and therefore, UltraTech’s bid should be rejected on the eligibility criteria under section 29(A) of the I BC, which forbids any related party to bid for an asset under liquadation.

The sale of the Braj Binani-promoted Binani Cement, the flagship company of Binani Industries, was expected to be a smooth affair. The company has a global manufacturing capacity of 11.25 million tonne per annum with an integrated plant with two kilns and the four grinding plants in Rajasthan. This is expected to give the Aditya Birla group strong foothold in western India.

The dispute between the two bidders arose as the letter of comfort was handed out by UltraTech after it lost out to rival, the Dalmia-led consortium, in a bidding process under the IBC 2016. UltraTech’s  revised bid  came close on the heels of Dalmia Cement announcing that its Rs 6,350 crore bid to buy Binani Cements had been accepted by the lenders last month.

Dalmia contested that it wasn’t a transparent process. Dlamia had  offered Rs 6,350 crore with a 20% equity in Binani Cement  to the lenders. 

Matters got further complicated with State Bank of India, Hong Kong branch, approaching the NCLT to be paid off their dues of Rs 40 crore for corporate guarantees they had extended to Binani. 

CEMENTING DEAL

• The company will get strong foothold in Western India if the bid is awarded by the NCLT
   
• Dalmia challenges the lender’s move in Supreme court
   
• Initially, Dalmia consortium was voted the highest bidder