UltraTech Cement makes out-of-court offer to take over Binani Cements for Rs 7,266 crore

Ultratech Cement on Tuesday made an offer to take over loan debt-laden Binani Cements for Rs 7,266 crore.

The acquisition interest expressed by the Aditya Birla Group poses a serious challenge to the NCLT bankruptcy resolution process.

Rival Dalmia Cements' had virtually bagged Binani Cements for Rs 6,350 crore last Wednesday in the court-supervised process and also promised a 20 per cent stake to the lenders to whom the promoters owe Rs 4,200 crore.

In the twists that started this morning, Ultratech gave a "comfort letter" to Binani Cements earlier this morning offering Rs 7,266 crore for a 98.43 per cent stake, which will bail the crippled company out. The offer is contingent on the resolution case moving out of the NCLT.

Both the companies separately moved the National Company Law Tribunal in Kolkata overseeing the debt resolution since July last year.

Ultratech and Binani alleged lack of transparency in the bidding process, and of being kept out of critical discussions by the resolution professional.

Speaking to reporters at a Binani group office in the financial capital late this evening, its corporate strategy advisor Sameer Kaji said that "maximising value" is the key objective of the bankruptcy process and claimed that this deal addresses that the best.

He, however, declined to comment on 20 per cent stake offered by Dalmia to lenders. Kaji also said Binani has not contacted the lenders since the fresh turn of events.

The companies are relying under a provision in the Insolvency and Bankruptcy Code that gives the NCLT the powers to terminate an ongoing resolution process.

Ultratech managing director KK Maheshwari at a separate press conference late this evening said their offer, which was the second highest bid for the asset at NCLT, rests on "strong merits".

When asked if this sets a bad precedent for the NCLT driven resolution process, given that the courts are seized of the matter since last July and a deal has been stitched in the last moment with a rival, Kaji said it does not lead to that.

He further said resolutions under the IBC framework are "changing and evolving" regularly and lead to a learning at every stage. When asked whether their revised offer will pass the legal muster, Maheshwari said, "the court has to decide what is fair and equitable treatment needed."
On the timing of the deal, Kaji said the Birla group approached them and added that all of it happened "only today".

"For us, the process is not complete. When you've somebody bidding X, and Y bidding X-plus something, why would you accept X? Who says the process is over? We're questioning the basic process, which was not run transparently," Kaji claimed.

Ultratech Cement is the leader in the cement industry with a 92.5 million tonne installed annual capacity, and the fourth largest in the world excluding China.

Binani Cement, on the other hand, has an installed capacity of just 6.25 million tonne. At the first round of bidding there were four suitors and JSW Cement had emerged as the highest bidder.