UltraTech Cement may get support from Binani creditors

UltraTech has now challenged the sale to Dalmia Bharat at the National Company Law tribunal, and the matter is scheduled to be heard on Monday at the Kolkata bench of the tribunal

UltraTech says set to buy Binani Cement, seeks end to insolvency proceedings

UltraTech had increased its offer for Binani Cement after the Dalmia Bharat consortium emerged as the highest bidder.

Rival Dalmia Cements' had virtually bagged Binani Cements for Rs 6,350 crore last Wednesday in the court-supervised process and also promised a 20 per cent stake to the lenders to whom the promoters owe Rs 4,200 crore.

As requested by Binani Industries, UltraTech said that its board had agreed to issue a comfort letter confirming that the company will provide funds amounting to Rs 7,266 crore, the amount it had offered to the committee of creditors. Last week UltraTech Cement had alleged lack of transparency in the NCLT proceedings to auction Binani Cement.

UltraTech's announcement comes days after a group comprising cement maker Dalmia Bharat and a fund backed by Bain Capital and Piramal Enterprises said its bid for Binani Cement had won approval from the company's panel of creditors.

Yesterday, BIL had said that its board has made a decision to approach NCLT to terminate the insolvency proceedings commenced against its subsidiary BCL. Both the companies separately moved the National Company Law Tribunal in Kolkata overseeing the debt resolution since July past year.

"In consideration thereof, upon the termination of the insolvency proceedings of Binani Cements, the company has agreed and concluded in-principal commercial understanding to sell its entire 98.43 per cent shareholding interest in BCL to UltraTech Cements Ltd", BIL said in a regulatory filing.

After India enacted its first formal insolvency law in 2016 to help cut record bad loans at its lenders, the central bank has steered some of the biggest loan defaulter companies for resolution under the bankruptcy court process. Any direct line of communication between the owners of the defaulting company and one of the bidders "goes against the spirit and scope of the code", Gupta said, adding that Dalmia's bid, which has creditors' approval, should be honored unless set aside in line with the law.

Binani has sought to withdraw the company from ongoing bankruptcy proceedings at the NCLT, Sameer Kaji, a senior advisor for the group, told a televised news conference on Monday, adding that the UltraTech offer would mean no haircuts for the creditors.

"For us, the process is not complete. We're questioning the basic process, which was not run transparently", Kaji claimed. "There is no legal provision which states that such parallel arrangement can be heard in NCLT".

Binani Cement owns and operates 6.25 million tonne per annum cement manufacturing facility in India and its subsidiaries own, and operates 3 MTPA clinker capacity in China and 2 MTPA cement grinding facility in Dubai.

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