Binani Cement lenders deny UltraTech bid to maintain sanctity of IBC process

UltraTech Cement had once again raised its offer to Rs8,000 crore to acquire Binani Cement, a move that was rejected by the bankrupt firm’s lenders. Photo: HT

UltraTech Cement had once again raised its offer to Rs8,000 crore to acquire Binani Cement, a move that was rejected by the bankrupt firm’s lenders. Photo: HT

Mumbai: Lenders of Binani Cement Ltd on Tuesday told the Kolkata bench of the National Company Law Tribunal (NCLT) that they declined to consider the revised bid of Ultratech Cement Ltd because they were of the view that the sanctity of the IBC process and “certainty of contracts” were more important than higher realization through an unsolicited bid.

If lenders started to consider revised bids of unsuccessful bidders, the process of time-bound insolvency resolution through “secret bids” would be undermined, Pratap Chatterjee, counsel for the company’s committee of creditors, submitted at the tribunal. Creditors followed established guidelines of the Central Vigilance Commission while rejecting UltraTech’s revised bid, he added.

When asked by the bench if by a majority decision, lenders could ignore a higher bid, Chatterjee said they took a stand that the rules of the game couldn’t be changed after the game had started. They decided to stick to the so-called process document, which was agreed upon by the committee of creditors at the beginning of the resolution process.

At least 90% of the creditors had agreed when finalizing the process document that the committee will negotiate only with the highest bidder, Abhrajit Mitra, counsel for the resolution professional said.

Dalmia Bharat Ltd was declared the top bidder for Binani Cement’s 11 million tonne production capacity, and a resolution plan with its Rs6,700 crore bid has been filed with the Kolkata bench of the NCLT for its approval. After being outbid, UltraTech made a higher bid and circulated it among lenders and the resolution professional by email.

UltraTech also struck a deal with Binani Industries Ltd, the parent of the delinquent cement maker, to acquire its 98.43% stake in the company at Rs7,266 crore. However, the plan did not materialize as it required the insolvency resolution process to be halted, and the Supreme Court declined to do so.

According to some reports, UltraTech has since raised its offer again to around Rs8,000 crore. Its bid is backed by the operational creditors of Binani Cement, who claim their interest will not be protected if Dalmia Bharat wins the firm.

They have submitted that the firm owes some 3,000 vendors over Rs700 crore, which Dalmia Bharat is looking to settle for only Rs151 crore. UltraTech declined to comment on lenders’ view on its unsolicited bid.

Exim Bank, an unsecured creditor, on Tuesday said it would be forced to take a haircut of Rs170 crore if Dalmia Bharat’s resolution plan is accepted.

But Mitra, counsel for the resolution professional and Chatterjee, lawyer for the lenders, submitted Exim Bank had earlier voted in favour of Dalmia Bharat’s resolution plan.

Exim Bank had asked for further negotiation with the highest bidder so that its offer could be raised, they said, adding that Dalmia Bharat had eventually agreed to sweeten its offer for Exim Bank. Whereas the lender was to receive only 52% of its dues under Dalmia Bharat’s initial offer, it was raised to 72% after discussions with the bidder, they added.

Hearing will continue on Wednesday.

Tanya Thomas in Mumbai contributed to this story.

First Published: Tue, Apr 17 2018. 09 42 PM IST

Source: Livemint