UltraTech Cement Gets Lenders’ Approval To Acquire Binani Cement
Lenders of Binani Cement Ltd. today approved the resolution plan submitted by UltraTech Cement Ltd., as part of the insolvency resolution process.
The committee of creditors had approved the plan in a meeting yesterday, and issued the letter of intent today, UltraTech said in a filing to the stock exchanges. The Kumar Mangalam Birla-backed company beat a rival consortium that included Dalmia Bharat Ltd. and a Bain Capital-backed fund. The resolution plan is now subject to approval by the National Company Law Tribunal.
Financial creditors led by Edelweiss Asset Reconstruction Company Ltd. voted to accept UltraTech’s Rs 7,950 crore offer as the highest bid, BloombergQuint had reported on May 28.
If approved, the acquisition will boost UltraTech’s capacity to 116.15 million tonnes per annum, according to the exchange filing. It will also give the Aditya Birla Group company access to Binani Cement’s large reserves of high quality limestone.
The announcement comes after the NCLT 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.