UltraTech to buy Binani Cement for Rs 7266 crore

Marco Green
March 20, 2018

In a filing to the stock exchange, UltraTech said it will issue a comfort letter to provide Rs 7,266 crore to Binani Industries Ltd for ending insolvency proceedings against Binani Cement.

According to a PTI report, Ultratech gave a "comfort letter" to Binani Cements offering Rs 7,266 crore for a 98.43 per cent stake, which will bail the crippled company out.

KK Maheshwari, Managing Director, UltraTech Cement, said the company has lost confidence in the NCLT proceedings and is still keen to know why its highest bid was rejected by the Committee of Creditors.

Binani Industries Ltd (BIL) said in a regulatory filing that its board today chose to apply to the National Company Law Tribunal (NCLT) to terminate the insolvency proceedings commenced against its subsidiary BCL.

Binani Industries and UltraTech have previously commented on the secrecy of the bidding process, with Binani's senior advisor stating that it had sought to withdraw itself from the bankruptcy proceedings as the process was not transparent.

Ultratech's counsel also alleged that there was a "lack of transparency". The move in effect bypasses the ongoing insolvency proceedings initiated by the lenders of Binani Cement. Any direct line of communication between the owners of the defaulting company and one of the bidders "goes against the spirit and scope of the code", Gupta said, adding that Dalmia's bid, which has creditors' approval, should be honored unless set aside in line with the law.

The tribunal on Monday directed Vijaykumar Iyer of Deloitte, the resolution professional, to file his statement on the selection of the Dalmia Bharat-consortium as the lead bidder for Binani Cement.

Binani Cement, a subsidiary of Binani Industries, was referred to bankruptcy court by Bank of Baroda.

Ultratech Cement is the leader in the cement industry with a 92.5 million tonne installed annual capacity, and the fourth largest in the world excluding China. "Unfortunately, we were never involved in any of the discussions", Kaji said, adding that the bankruptcy code allows promoter-shareholders to participate in the meetings but are not allowed to vote.

Binani Industries said the Board was not invited to attend the creditors' meeting and this has forced Binani Industries to move the National Company Law Appellate Tribunal (NCLAT) against the Resolution Professional (RP) of Binani Cement, alleging that its order was not followed while declaring the successful resolution plan for the struggling cement maker. "This could be the first case that could open up a new avenue for many other companies in financial distress", said Kaji.

Other reports by Click Lancashire

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