The committee of creditors for Binani Cement Ltd. today voted in favour of accepting UltraTech Cement Ltd.’s Rs 7,950 crore bid, two people in the know confirmed.
The bid is nearly Rs 1,000 crore higher than the amount offered by Rajputana Properties Ltd, the other bidder being considered by creditors. Rajputana Properties is a wholly owned subsidiary of the Dalmia Bharat Group.
Financial creditors led by Edelweiss Asset Reconstruction Company Ltd. voted to accept UltraTech Cement’s offer as the highest bid received under the insolvency and bankruptcy process initiated against Binani Cement. The bid exceeded lenders’ expectation of recovery, said the first of the two people quoted above, speaking on the condition of anonymity. Some of the other lenders in the CoC include IDBI Bank, Bank of Baroda, Bank of India and State Bank of India.
Binani Cement owes Rs 6,469 crore to its financial creditors, according to admitted claims available on the company’s website.
According to the second person quoted above, UltraTech Cement’s bid received approval from lenders representing more than 90 percent of the outstanding debt of all financial creditors. Under the current rules, a proposal needs approval from at least 75 percent of lenders by value, to go through.
The National Company Law Tribunal had asked lenders to reconsider UltraTech Cement’s bid after they had rejected it earlier. UltraTech Cement was not allowed to revise its bid for Binani Cement since lenders had agreed to not entertain the second highest bidder in the case. UltraTech Cement tried multiple times to revise its bid for Binani Cement, however, the creditors did not consider it.
Thereafter, in a parallel deal, UltraTech signed an agreement with Binani Industries Ltd. to buy its cement assets for Rs 7,266 crore and said it will seek termination of the insolvency process. This decision was subject to lenders agreeing to withdraw from the NCLT. However, this agreement did not go anywhere since lenders declined to settle out of court.
In its May 2 order, the NCLT said that the decision of the creditors’ panel to deny UltraTech an opportunity to be heard once its resolution plan was rejected is unfair, unjust and against the very objective of the IBC. It stated that the resolution professional and the CoC are duty bound to ensure value maximisation for shareholders of Binani Cement. The lenders’ argument that UltraTech had sent an offer on email and did not adhere to the timelines and process is not substantive, the NCLT ruled.
The tribunal also accepted the argument of EXIM Bank and Binani Cement’s operational creditors that they have been discriminated against and held that the plan proposed by Dalmia Group needs to be modified to account for their claims.
Dalmia Group had previously said that it will take appropriate action, if lenders decide to entertain UltraTech Cement’s bid.