This weekend when they meet, the group of lenders to Binani Cement Ltd. will try and come to a conclusion on a peculiar dilemma facing them – one, a winning bidder and conventional resolution to an ongoing resolution process or two, more money, but from a spurned bidder.
The six lenders, which includes five public sector banks and one asset reconstruction company, are faced with the prospect of bettering a debt recovery deal for insolvent company Binani Cement Ltd. with Binani’s parent company and potential acquirer UltraTech Cement Ltd. urging the bankers to pick their offer.
The insolvency process threw up Dalmia Bharat Ltd. as the preferred bidder. Coming in second in the two-horse race was UltraTech Cement Ltd. who has since struck a separate deal with Binani Industries Ltd. to buy its 98.43 percent shareholding in the insolvent cement company. The two are now seeking to terminate the insolvency process and convince bankers to accept their bid, which at Rs 7,266 crore is reportedly higher than Dalmia’s offer of Rs 6,350 crore, as reported by Bloomberg.
Together Binani and UltraTech have reached out to key financial creditors over the last five days to make their case, three people in the know have confirmed. The three people include two bankers who spoke on conditions of anonymity and a senior adviser for the Binani Group.
Conversations initiated by the Binani - Ultratech combine have been targeted at secured lenders to Binani Cements, led by Edelweiss Asset Reconstruction Company Ltd. The other secured lenders include Bank of Baroda, Canara Bank, IDBI Bank, State Bank of India and Bank of India. Together, these lenders are owed Rs 4,041 crore, according to the admitted claims put up by the resolution professional in the Binani Cement case.
An adviser to Binani Industries confirmed that conversations with lenders have continued. He told BloombergQuint that the group still hopes that lenders will see the proposed deal between Binani Industries and UltraTech as superior.
We have had conversations with lenders involved in the case and realise that recovery is their main objective. The NCLT’s observation on Monday gives us hope that we have a chance of convincing all the lenders of the merit in our proposal.Sameer Kaji, Senior Group Adviser, Binani Industries
Ironically, while creditors see merit in UltraTech’s contention that its bid is superior to Dalmia Bharat’s, they are reluctant to stick their neck out and reverse the earlier decision of the committee of creditors without court sanction, suggested two of the lenders quoted above while speaking on the condition of anonymity.
On Tuesday, Binani Industries told the National Company Law Tribunal that it has now found means to pay all the creditors and can make the payment before April 10. The NCLT said it was open to the CoC to consider Binani’s proposal. The hearing will continue on April 2.
Based on this suggestion the lenders have agreed to hold an informal meeting on Thursday to consider Binani’s proposal, said two people aware of the meeting. One of them indicated that in order to consider any resolution outside the insolvency process the lenders would seek full repayment of all liabilities, not just those admitted by the resolution professional and they would seek payment guarantee. Then there’s the sticky issue of legal sanction, which based on jurisprudence would have to be approval from the Supreme Court.
Neither the lenders mentioned above, nor UltraTech responded to BloombergQuint’s official queries.
(Corrects an earlier version which said the lenders will hold an informal meeting on Thursday.)