Banks to take a call on Wednesday on increased offer for Binani Cement

NCLAT approves the out-of-court resolution, admits Binani's plan; UltraTech-backed offer is Rs 7 bn more than the Dalmia Bharat Cement-led consortium's plan

The stalemate over the debt resolution of Binani Cement is likely to end soon, with lenders planning to consider an out-of-court settlement with Binani Industries, the promoters, on Wednesday. 

The UltraTech-backed Binani Cement’s offer is Rs 7 billion more than the Dalmia Bharat Cement-led consortium’s plan selected by creditors.

A meeting of lenders has been called after the Kolkata bench of the National Company Law Tribunal (NCLT) asked them to consider an out-of-court settlement. The NCLAT, the appellate authority, also permitted on Tuesday an amicable solution to the case and admitted Binani’s plan.

Counsel for Binani Cement said the two directives had made it “binding on the lenders to consider Binani Cement’s proposal”. The lenders will have to revert to the NCLT on April 9 and to the NCLAT on April 19 with their decision. 

The appellate tribunal headed by Justice SJ Mukhopadhyay said both lenders and Binani Cement might directly move the Supreme Court for approval if they agreed to a settlement.

Binani has offered 100 per cent debt repayment to all creditors, including operational creditors. UltraTech Cement is in the process of buying a 100 per cent stake in Binani Cement from the promoters after its offer was rejected by the committee of creditors.  Sameer Kaji, senior advisor to Binani Cement, told Business Standard in case the lenders agreed to their plan, repayment to the creditors will run parallel to Binani’s deal with UltraTech. Binani will also be offering a bank guarantee to the creditors to push its proposal in the scheduled meet.

The lenders had earlier scheduled this meeting on March 29 but called it off as there was no written order from the tribunal. However, the NCLT extended the time-frame for such a meeting on April 2.

“The meeting has been scheduled on Wednesday in the evening to consider the fresh offer from Binani Cement,” a source close to the development said. According to the lenders, the Rs 72.66 billion proposal from Binani will have to clear all dues, including interest till day, if at all it should be discussed by the creditors.

“We will be submitting our proposal to the lenders latest by Wednesday morning, based on which they can have the discussion. Also, our representative will be there in the meeting,” Kaji said.

Sources suggest the lenders will be meeting to consider the merits and demerits of the proposal from Binani Cement. However, a final call on the matter is unlikely to take place in the meeting. Legal issues and implications on the lenders are also expected to be discussed.

Under the proposal from the Dalmia Bharat Cement-led consortium, which the lenders have approved and sent for approval to the NCLT, the secured financial lenders will be getting their entire principal amount along with interest till July 2017. But, under the new Binani-UltraTech’s proposal, lenders will get back the interest till this day in addition to the principal amount.

“It is one-of-a-kind case in the NCLT, and the tribunal has given a chance to the mortgagee to pay back the lenders. I don’t think the directive of an out-of-court settlement will affect other cases on a similar line where we have an exposure,” a lender to Binani Cement told this newspaper.

Sources in Dalmia Bharat Cement suggested the CoC was bound to honour the letter of intent issued to the consortium after it emerged as the successful bidder.

An UltraTech source alleged their offer for Binani Cement was ignored by the resolution professional despite it being higher than the rival. “The RP should have been more transparent in the entire process,” the executive said.