Big boost for UltraTech’s Binani bid; NCLT’s Kolkata bench asks lenders to consider company’s offer

UltraTech Cement’s bid to acquire Binani Cement has got a big boost. The Kolkata bench of the National Company Law Tribunal (NCLT) has asked the Committee of Creditors (CoC) to consider a proposal by Binani Industries – parent company of Binani Cement – for an out-of-court settlement with the Aditya Birla firm.

According to the settlement, UltraTech will issue Binani Industries a letter of comfort providing Rs 7,266 crore. Binani Industries will use the funds to pay off Binani Cement’s creditors, including the unsecured ones. In return, UltraTech will acquire 98.47 percent stake in BInani Cement

The Bench added it will hear all the petitions on April 2.

Binani Industries had earlier asked the Bench for permission to pay off its lenders by April 10.

UltraTech had alleged lack of transparency in the proceedings to auction Binani Cement, which was referred to the NCLT after accumulating debts of Rs 5,000 crore.

In a meeting held on March 16, the CoC had approved the plan presented by Dalmia Cement, dealing a blow to UltraTech’s plans.

Dalmia had offered bid worth Rs 6,350 crore to Binani’s lenders, with an equity of 20 percent.

Respite for smaller creditors

“This is the best example of upholding the law of the country,” said Sidharth Tibrewal, Senior Committee Member and spokesperson, Binani Operational Creditors Forum (BOCF). The Forum represents 3,000 operations creditors of Binani Cement.

“This is a big win for everyone,” added Tibrewal.

The Forum has claimed Rs 550 crore in unpaid dues from Binani Cement. “While the lenders were getting 16 per cent interest in their loans to the company, we were expected to take a haircut of almost 80 per cent,” added Tibrewal. He added that the claim will rise to Rs 700 crore if the rate of interest is added, as in the case of the banks.

The 3,000 operations creditors supply several items to Binani, and this includes coal, packaging and transportation services.

Binani’s total secured and unsecured debt amounts to about Rs 6,265 crore. Of this, the largest exposure is from Edelweiss ARC with an outstanding of about Rs 2,775 crore.
UltraTech had offered Rs 700 crore more than Dalmia. But after its bid was rejected by the lenders’ committee and the resolution professional, UltraTech challenged the decision in at NCLT’s Kolkata bench.moneycontrol

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