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Aditya Birla Group firm UltraTech on Thursday offered to pay 100 per cent dues of all non-financial creditors of Binani Cement, thereby increasing its offer by another Rs 7 billion to Rs 69 billion, sources said. The committee of creditors and the resolution professional will now be forced to look into UltraTech’s offer, almost Rs 6 billion more than the bid made by Dalmia Bharat Cement and Bain Capital’s Resurgent India Fund.
The offer was made by UltraTech in an email to the resolution professional on Thursday, after the National Company Law Tribunal (NCLT) in Kolkata heard UltraTech’s petition against resolution professional (RP) Vijaykumar Iyer of Deloitte for rejecting its earlier offer, sources added. The tribunal has asked the resolution professional to respond to UltraTech's petition and the matter is posted for hearing on March 19.
The resolution professional and the committee of creditors had earlier selected Dalmia Bharat Cement’s Rs 63 billion offer, which included an offer to repay all secured lenders and one unsecured lender, IDBI Bank. This was because only IDBI Bank had the voting power among all the unsecured creditors of Binani Cement, sources said.
The Dalmia Bharat offer “squeezed out” the rest of the non-financial bidders despite the Insolvency and Bankruptcy Code (IBC) being clear that the interest of all stakeholders should be balanced, they added.
With its latest offer, UltraTech will pay 100 per cent dues of all lenders, both secured and unsecured, as compared to a 70 per cent offer made to non-financial creditors earlier. The support of unsecured creditors, mostly small and medium enterprises, is necessary to keep Binani Cement running.
A Deloitte spokesperson declined to comment on the issue citing client confidentiality. A Dalmia Bharat spokesperson said the company will not comment on the Binani Cement acquisition at present.
Binani Industries, the promoter of Binani Cement, has already challenged the resolution professional in the tribunal, saying the resolution professional has “personal interest” in undervaluing Binani Cement and then selling it to a preferred bidder. According to Binani Industries, the value of Binani Cement is Rs 173 billion. The Binani petition will be heard on Friday.
Industry sources said the haste showed by the committee of creditors and the resolution professional in preferring a particular party needed to be investigated and all the details of how the weightage was assigned should be made public. “This process is flawed and non-transparent. The entire process needs to be probed… on what basis they dropped the JSW offer, called for bids again and then ignored the offer from a credit worthy company,” a source close to the development said.
Interestingly, in the first round of bidding for Binani Cement, JSW Cement had emerged as the highest bidder. But its offer was rejected and another round of bids was called. Six companies, including UltraTech, Dalmia Cement, stock broker Rakesh Jhunjhunwala, Heidelberg Cement, Ramco Cement, and JSW Cement, participated.
Bank of Baroda had moved NCLT Kolkata last July after the company failed to repay Rs 39.7 billion debt. Binani Cement has a production capacity of 11 million tonnes per annum (MTPA). UltraTech has also sought the Competition Commission of India’s (CCI’s) approval for the acquisition of Binani Cement.