Dalmia Bharat wins Binani Cement in nail-biter

Dalmia Bharat-led consortium has won the bid for Binani Cement with a bid of around Rs 6,700 crore and detailed resolution plan where the company has agreed to give the lenders a 20% stake.

The selection was made through a granular marking procedure and Dalmia Bharat consortium won the bid by a margin of just 0.23%, said a banker who is part of the committee of creditors (CoC).

In a tightly fought bidding process, the Dalmia-led consortium beat A V Birla group company UltraTech, a strong contender. Dalmia had made a joint offer with India Resurgence Fund, which is backed by Bain Capital Credit and corporate group Piramal Enterprises.

"Both the bidders offered a 20% stake to the lenders, but the lenders would prefer to take cash instead of an equity stake," said a banker.

"The equity offering was made because there was some marking for equity offering also," said the banker.

"This is the first conclusion of a case under the Insolvency and Bankruptcy Code where the bankers have got more than 100% of their debt," he said.

The company owes banks about of Rs 4,000 crore. The total money the company owes to the lenders, including unsecured creditors, is about Rs 7,000 crore. Edelweiss Asset Reconstruction Co, which owns 70% of the debt, is the lead financial creditor, while the remaining debt is held by State Bank of India, Bank of Baroda, Bank of India and IDBI Bank.

The bidding process was guided by an evaluation system divided into quantitative and qualitative criteria. The quantitative criteria, comprising the prospective equity upside that banks could gain and equity infusion by the promoters, will carry 70 marks. For example, if the promoters bring in upfront cash, they will get 20 marks. If he gets about 30% of the net present value (NPV) of the total resolution, he will get another 50 marks.

The qualitative criteria, which will include track record of the bidders and the ability to turn around the company, will fetch 30 marks. The case at National Company Law Tribunal was filed by Bank of Baroda in the tribunal's Kolkata bench.

Binani Cement, owned by Braj Binani, has a global manufacturing capacity of 11.25 million tonne per annum with integrated plants in India and China and grinding units in Dubai.

CEMENTING A DEAL

• The total money the company owes to the lenders, including unsecured creditors, is about Rs 7,000 crore
   
• Edelweiss Asset Reconstruction (owns 70% of the debt) is the lead financial creditor