In a surprise turn of events, Aditya Birla Group's Ultratech Cement on Monday made an offer to take over loan defaulter Binani Cement for Rs 7,266 crore, posing a challenge to the nascent bankruptcy resolution process. Rival Dalmia Cements' had virtually bagged Binani Cement 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 Monday 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 on Monday 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 Monday 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. He also alleged that the NCLT had sought the presence of the resolution professional on Monday, which was not acceded to. The next hearing for the case is on March 22.
Binani Cements has a total liability of Rs 5,960 crore and the extra money will be distributed among the shareholders of the company, Kaji said, adding over 40,000 shareholders stand to benefit.
When asked about funding the deal if it goes through, Maheshwari said Ultratech is a zero-debt, cash rich company which can arrange the required Rs 7,266 crore within 24 hours.
Buttressing the credentials of thier bid, he claimed that 50 per cent of its acquired assets are doing extremely well and added that its capacity utilisation at the recently acquired Jaypee Cement's 21 million tonne has gone up to 75 cent from a low 18 per cent when they bought them.
Filing a contempt plea against RP and representatives of Deloitte who are assisting the resolution plan, Binani Industries (the parent of the cement company) has asked the NCLT Appellate Tribunal to declare the meeting of committee of creditors of Binani Cement held on March 14 as "null and void" in which the bid of Dalmia Bharat Cement was approved.
It also raised questions over the valuation of Dalmia Cement by the RP in the resolution process and alleged that he is conducting the process in a manner that is detrimental to the interests of the company.
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.