UltraTech Offers To Acquire Binani Cement In Test For Bankruptcy Law

Lloyd Doyle
March 20, 2018

UltraTech had also put in its bid for Binani through the NCLT-led process but the RP picked Dalmia Bharat.

Mumbai: The top cement maker UltraTech Cement Ltd on Monday offered $1.1 billion to buy Binani Cement Ltd days after a rival bid in what could be a test case for the country's fledgling bankruptcy process.

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. Last week, UltraTech increased its bid to Rs 6,900 crore, besides offering to pay 100 per cent of secured and unsecured lenders' debt, but it didn't get favourable response, compelling it to move the NCLT.

UltraTech's latest Rs 7,266 crore ($1.11 billion) offer will give it 98.43 per cent of Binani Cement, the company said, adding a deal will only be concluded at the end of bankruptcy proceedings against Binani.

"The promoters of Binani Industries can no longer take decisions on behalf of its subsidiary", Arjun Gupta, a corporate insolvency lawyer with Nishith Desai Associates said, referring to a local term for the company's majority owners. Ultratech and Binani today alleged lack of transparency in the bidding process, and of being kept out of critical discussions by the resolution professional. 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.

In a petition filed with the NCLAT company has asked to declare the meeting of the Committee of Creditors (CoC) of Binani Cement held on March 14, 2018, as "null and void" as it is in gross violation and wilful disobedience of the order dated March 3, 2018 was indulging in criminal obstruction of administration of justice, Binani said in its petition.

The NCLT will hear Binani's plea on March 22, Kaji told Reuters.

Ultratech Cement is the leader in the cement industry with a 92.5 million tonne installed annual capacity, and the fourth largest in the world excluding China. Kaji also said Binani has not contacted the lenders since the fresh turn of events. They also confirmed that they will provide Rs 7,266 crore to Binani Cement to pay-off bank debts and other liabilities as admitted in the Insolvency proceedings against an offer of sale or transfer of its entire BCL equity shareholding.

Other reports by Iphone Fresh

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