Dalmia Bharat to stick to its Rs 67 billion offer for Binani Cement

The NCLT has ordered the CoC to consider UltraTech Cement and Dalmia Bharat Cement's offers, while bearing in mind the objective of IBC, which is value maximisation

The National Company Law Appellate Tribunal (NCLAT) on Friday rejected the Dalmia Bharat-led consortium's plea to obtain a stay on the decision of the Kolkata Bench of the National Company Law Tribunal (NCLT), which had directed the Committee of Creditors (CoC) to consider UltraTech's revised bid for Binani Cement and reconsider Dalmia Bharat's offer only if it quotes higher than UltraTech.
 

The Dalmia Bharat-consortium, which had moved the NCLAT since it did not want to revise the bid, was "weighing options", but would not quote a higher price even after Friday's order, sources said.

Against the near Rs 67 billion offer by Dalmia Bharat, which had emerged as the highest bidder, UltraTech's offer, after a second revision, stands at Rs 79.60 billion.

"There is a limit to the cost of acquisition of the assets of Binani Cement. The offer quoted by Dalmia Bharat is just, but the offer of the hitherto unsuccessful bidder (UltraTech) is much higher than the value of assets of Binani Cement," said sources close to Dalmia Bharat.

According to the findings, the resolution professional (RP) valued the assets of Binani Cement at Rs 23 billion on liquidation, but Dalmia Bharat's offer was nearly three times the liquidation value and UltraTech's offer was Rs 10.22 billion higher than Dalmia Bharat.

Also, the selection of the Dalmia Bharat-led consortium was in accordance with the country's legal framework under the Insolvency and Bankruptcy Code (IBC) and other regulations and there was no need to revise the offer higher, a source in Dalmia Bharat said.

"Lenders were also satisfied with our offer. Otherwise, why would they issue a letter of intent to us and send our proposal for NCLT's approval? It proves that the offer was right and just," they added. 

In case Dalmia Bharat doesn't raise its bid value, the CoC is likely to accept UltraTech's proposal.

The Kolkata Bench of the NCLT had directed the CoC to consider the offers of both parties but "bear in mind the object of the Code (IBC)."

During the course of the hearings on this case, Jinan K R, member, judicial at the Kolkata Bench of NCLT, observed that the objective of the IBC was maximising value and paying off stakeholders. 

According to sources opposing Dalmia Bharat's bid, the CoC is likely to meet on May 5 or May 7 to consider UltraTech's proposal. Previously acting upon the suggestions of the Tribunal for an out-of-court settlement with Binani Cement to clear off its dues, lenders had considered the UltraTech-backed offer. It was then that Dalmia Bharat wrote to lenders reminding them of the legality of its selection as the highest bidder. Dalmia Bharat had also sent letters to the Central Vigilance Commission (CVC), the Reserve Bank of India (RBI), public sector banks and others on the issues.