Insolvency: Binani lenders refuse to consider UltraTech-backed proposal

Citing the Kolkata bench of NCLT’s observations on March 27 as a suggestion and not an order of the Tribunal, the Committee of Creditors (CoC) of Binani Cement, which is facing bankruptcy proceedings, has decided not to go ahead with a meeting to discuss an UltraTech Cement backed proposal mooted by Binani Cement.

On Wednesday, the lenders had consented to a meeting scheduled on March 29 but called it off late in the night on Wednesday itself.

Speaking to Business Standard, a source among the lenders said, “The judge had stated his comments as a suggestion and not an observation leaving it to the lenders to consider an out of court settlement. We have decided to protect the sanctity of the IBC procedure and hence have decided not to discuss Binani Cement’s alternative proposal to terminate IBC proceedings”.

Following UltraTech Cement’s Rs 72.66 billion offer in exchange for picking up a 98.47 per cent stake in Binani Cement, the latter had approached NCLT to terminate IBC proceedings against it. In turn, a two-member panel of judges in the Kolkata bench had suggested the lenders to consider this offer and opt for an out-of-court settlement. The lenders are supposed to revert back to the Tribunal on April 2.

However, before NCLT’s suggestions came in, the CoC had already nodded to Dalmia Bharat Cement led consortium’s Rs. 65-66 billion proposal and issued a Letter of Intent (LoI) to Dalmia Bharat Cement. 

In turn, this company, which is the H1 bidder, has deposited Rs 3 billion with the lenders to honour the LOI.

“We have already selected the H1 bidder and issued a LoI as per the IBC law. We would like to abide by the law and unless the Tribunal passes an order to consider any other proposal, we would like to stick to what we have already selected”, the source in the CoC told this newspaper.

Against Dalmia Bharat Cement led consortium’s Rs. 65-66 billion proposal, Binani Cement’s proposal stands at Rs. 72.66 billion.