Binani Cement lenders to meet on Wednesday to mull UltraTech revised offer

Sources say only UltraTech's proposal will be discussed and if accepted, lenders will ask Dalmia Bharat Cement-led consortium to match it

The Committee of Creditors (CoC) of Binani Cement is likely to meet on Wednesday this week to consider the revised offer of Rs 79.60 billion from UltraTech Cement for acquisition of the stressed assets of Binani Cement. The company is currently undergoing insolvency proceedings in the Kolkata bench of NCLT.

This follows the NCLT’s order which directed the CoC to consider the Aditya Birla Group company’s proposal despite it being termed as the “unsuccessful bidder” by the CoC. The Tribunal had ordered Binani Cement’s resolution professional (RP) to submit the revised proposal from UltraTech to the CoC and also accommodated any modifications to the proposal if necessary.

Previously, the CoC had narrowed upon last Saturday (May 5) to hold the meeting but then pushed it to Monday (May 7) as the RP had sought some clarifications from NCLT on its order. Sources close to the RP said that the clarifications over the admissible bid amount from UltraTech, which was sought, have been given by NCLT and its proposal has been sent to the lenders for their consideration.

Sources among the lenders suggested that in the forthcoming meeting, only UltraTech’s proposal will be discussed and if accepted, the lenders will ask the Dalmia Bharat Cement led consortium – the H1 bidder – to match the proposal.

“In case Dalmia Bharat ups their offer and matches, it will again come back to the CoC for their consideration and the two offers will be discussed again but if Dalmia Bharat doesn’t raise its bid, it is likely that UltraTech’s proposal will make its way through”, a leading lender to Binani Cement suggested.

In case Dalmia Bharat raises its bid, UltraTech will have to quote higher and revise the proposal again.

As per NCLT’s order, the CoC is bound to give the otherwise H1 bidder the chance to match the proposal from UltraTech but has directed the CoC to “bear in mind the object(ive) of the IBC”, which according to the Tribunal is maximisation of value.

Lenders have decoded the NCLT’s order to imply that among UltraTech and Dalmia Bharat, whoever offers the highest money and clears the maximum dues of both the financial as well as operational lenders, will be selected to acquire Binani Cement.

On the other hand, sources in Dalmia Bharat are of the opinion that any amount higher than Rs. 67 billion will be financially unviable for this acquisition and will not offer higher amount other than the one which has already been accepted by the CoC.

However, the CoC’s verdict in narrowing down upon either UltraTech or Rajputana Properties – the consortium floated by Dalmia Bharat together with Piramal and Bain for Binani Cement takeover - depends on the decision of the NCLAT, which is expected on May 22.

After NCLT’s decision, Rajputana Properties had moved NCLAT on Friday, May 4, to obtain a stay on NCLT’s order. While the Appellate Tribunal didn’t immediately stay the Tribunal’s order, thereby allowing the CoC to proceed with its meetings, it slated the case’s next hearing on May 22.

“We may finally select any one among the two contestants, but it all depends on what NCLAT finally says. If it accepts Dalmia Bharat consortium’s plea, the entire scenario may change”, one of the lead lenders to the potentially bankrupt cement maker opined.

Sources said while Dalmia Bharat isn’t keen to revise its offer higher, it is weighing options to move to Supreme Court in case NCLAT’s decision is not in its favour.

Earlier, in the race for acquisition of Binani Cement, Rajputana Properties was selected as the H1 bidder by the CoC but UltraTech contested the process and had moved the Kolkata bench of NCLT. The Tribunal, after hearing its plea and other 12 associated petitions on the case, finally ordered the CoC and the RP to consider UltraTech’s proposal.

What the NCLT order says: 

• Resolution process to be completed by June 24 
• RP to accept UltraTech's revised offer, submit to CoC for consideration
• CoC to consider new UltraTech bid, permit further modification 
• Dalmia Bharat consortium may up its bid to match UltraTech's new offer