RP places Rs 67-bn plan by Dalmia Bharat Cement for approval before NCLT

As per Monday's order, Dalmia Bharat Cement's resolution plan, along with the allegations from UltraTech Cement and Binani Cement will be up for hearing on March 22

Despite UltraTech Cement and promoter of Binani Cement mounting opposition to the resolution plan approved by the Committee of Creditors (CoC) on March 14, the resolution professional (RP) for the bankrupt Binani Cement has placed the Rs 67-billion plan by Dalmia Bharat Cement-led consortium for approval of the Kolkata bench of NCLT.

On Monday, the court was hearing petitions from UltraTech Cement and Braj Bhushandas Binani, director of Binani Cement. While the former alleged that its bid was rejected by the RP without citing proper reasons, the petition from the latter alleged that the RP and CoC had reduced the assets valuation of Binani Cement from Rs 150 billion to Rs 30 billion.

It was during the course of court proceedings that the counsel, representing the RP, told Jinan K R, member judge at Kolkata NCLT, that the resolution plan has been filed with Kolkata bench of NCLT for the final approval.

As per Monday's order, Dalmia Bharat Cement's resolution plan, along with the allegations from UltraTech Cement and Binani Cement will be up for hearing on Thursday, March 22.

The judge is of the opinion that while it is essential that one should target to get the maximum value from sale of stressed assets, the resolution plan cannot be heard in isolation.

The counsel from UltraTech Cement and Binani Cement also questioned how can the CoC conclude finally upon a plan when applications over the bid selection procedure, valuation of assets and others are lying with the NCLT for decision.

A lawyer representing operational creditors also alleged that their claims have not been verified.

After the order of NCLT, UltraTech Cement, in a notification to the Bombay Stock Exchange stated that it has entered into an initial agreement with the promoters of Binani Cement where the Aditya Birla Group held company has proposed to buy 98.43 per cent stake in the company for Rs. 72.66 billion which is subject to termination of IBC proceedings against Binani Cement.

As on March 31, 2017, promoters of Binani Cement hold 98.43 stake in the company which is equivalent to the offer of UltraTech Cement.

Sources said that under the plan, UltraTech Cement will issue a "comfort letter" to Binani Cement, which, the legal counsel of Binani Cement may use in the Kolkata bench of NCLT on March 22 as an alternate plan to what the RP has submitted.

Although UltraTech Cement has become the highest bidder after revision of the initial bid on March 7, the revision was proposed after the CoC had selected Dalmia Bharat Cement as the H1 bidder on February 27.

The lawyer representing the RP claimed if UltraTech Cement had to come up with a better offer than the one chosen by the CoC, why didn't it come up in the stipulated timeframe when bids were open. However, the counsel added that the revised bid of UltraTech Cement was considered by the CoC but was rejected afterwards.

A source claimed, "Once a matter is admitted in NCLT, one has to go by the legal procedure. There is no legal provision which states that such parallel arrangement can be heard in NCLT".

After consultation with lawyers, another source close to Dalmia Bharat Cement claimed, "By this move, UltraTech Cement is colluding with the promoters of Binani Cement who are defaulters and have been dragged to NCLT by the lenders. This may itself make UltraTech Cement a defaulting party".

Asked about the comfort letter, sources close to Binani Cement said, "For the interest of justice, we can try to place the case before the judge with the comfort letter".

In July 2017, Bank of Baroda dragged the Rs 38.84-billion debt-laden Binani Cement to NCLT after the former failed to repay the bank a loan of over Rs. 0.97 billion. The case was admitted and subsequently, Vijay Kumar Iyer was appointed as the RP. JSW Cement initially led the bid but a fresh round of bidding was called, from which the Dalmia Bharat Cement- Bain Capital's Resurgent India Fund consortium emerged as the preferred bidder.

If the deal is finally endorsed by NCLT, it will be the third such acquisition by Dalmia Bharat Cement, the previous others being the bankrupt Murli Cement and Kalyanpur Cement.