Dalmia Bharat won't revise offer, will move NCLAT if UltraTech plan okayed

As per the Tribunal, the spirit and objective of IBC is maximisation of value

Unwilling to budge on its Rs 65.89 billion takeover offer of the stressed assets of Binani Cement, the Dalmia Bharat Cement-led consortium, which previously won the bid, will move the National Company Law Appellate Tribunal (NCLAT) if the Kolkata bench of the NCLT gives approval to the UltraTech Cement’s offer.

On Tuesday, the appellate tribunal rejected Dalmia Bharat’s plea to maintain the status quo on the ongoing tussle between itself and the Aditya Birla Group firm for the acquisition of Binani Cement.

A source said since Dalmia Bharat was not revising the offer, the committee of creditors (CoC) was at will to select either its offer or the one from UltraTech, which is Rs 13.76 billion higher. “According to the process, the resolution professional, with the CoC’s recommendation, will place the favoured bid before the NCLT. If the NCLT decides to go ahead with the UltraTech bid without the NCLAT's approval, the Dalmia Cement-led consortium can challenge this decision and take it up before the NCLAT on July 10,” the source said.

Already, this company has filed a case in the NCLAT, appealing to stay NCLT’s order which admitted UltraTech’s bid and indirectly asked Dalmia Bharat to up its offer. Although the Appellate Tribunal declined to stay NCLT’s order, it had listed the case for hearing. The case has been adjourned till July 10.

According to this source, even if the lenders of Binani Cement and UltraTech sign a deal and if any cash transfer happens, the NCLAT has the power to reverse the process. On the other hand, the NCLT has set June 24 as deadline for the resolution process failing which Binani Cement will face liquidation according to  IBC. However, lawyers involved in the case have suggested that an extension by the tribunal may be granted. “It follows from today’s discussion at NCLAT that the CoC is at will to go ahead with the resolution process and it can’t be stalled,” a source close to UltraTech said.

After the CoC met last Friday to discuss the proposal from UltraTech, it gave Dalmia Bharat time till 12 noon on May 23 to match the offer from UltraTech.

Sources among the lenders said that in case Dalmia Bharat doesn’t up its offer, the CoC may accept the plan from UltraTech and place it before the NCLT for approval. “The NCLT’s directive to the CoC is clear from its order — it has to consider both the proposals while keeping in mind the spirit of the IBC and then take a call,” one of the financial lenders to Binani Cement said.

According to the tribunal, the spirit and objective of IBC is maximisation of value. A second lender is of the opinion that in the face of no revision of bid by Dalmia Bharat, the CoC will approve the offer from UltraTech.

On the other hand, even though Dalmia Bharat alleged that UltraTech is not eligible to bid for Binani Cement as it flouted Section 29A of the IBC, the CoC gave a clean-chit to UltraTech in that meeting and considered the latter’s bid.

Dalmia Bharat’s inflexibility to revise its offer primarily springs from its contention that its selection was in accordance with the law under the IBC framework and the cost of acquisition of Binani Cement for any amount higher than their offer isn’t feasible. “There is a limit to the cost of acquisition of the assets of Binani Cement. But above all, why should we revise our offer? Our selection as the H1 bidder was in accordance with the IBC rules and regulations. 

So, we don’t have any need to up our offer,” a source in Dalmia Bharat said.

Under the given circumstances, it is most likely that Dalmia Bharat will move the Supreme Court again for the final outcome of this takeover case under the IBC.

            Why Dalmia Bharat won’t revise its offer

• Has followed the IBC and other legal procedures
• Committee of Creditors was satisfied with its offer
• Has quoted nearly three times the liquidation value of Binani Cement in the resolution plan 
• If it quotes higher, the acquisition will not be financially viable