Aditya Birla Group-owned UltraTech Cement has in-principle agreed to acquire rival Binani, which is undergoing insolvency proceedings in the National Company Law Tribunal, for Rs 7,266 crore. However, the deal is subject to clearance from NCLT and other regulators.
“The company has in-principle concluded commercial understanding with Binani Industries for purchase of 98.43 per cent of the shareholding of Binani Cement, subject to termination of IBC (Insolvency and Bankruptcy Code) proceedings, entering into a definitive agreement, and other customary and regulatory approvals,” UltraTech said on Monday.
As requested by Binani Industries, UltraTech said that its board had agreed to issue a comfort letter confirming that the company will provide funds amounting to Rs 7,266 crore, the amount it had offered to the committee of creditors. Binani will use the comfort letter as a support to its application seeking termination of the IBC proceedings.
UltraTech's bid is a fresh twist in the process of auctioning Binani Cement, which had A debt of around Rs 3,800 crore.
Just last week on March 16, the Committee of Creditors had approved the resolution plan submitted by Rajputana Properties Pvt Ltd., a Dalmia Bharat Group entity.
That resolution plan envisaged Rajputana forming a 50:50 joint venture with India Resurgence Fund (backed by Piramal Group and Bain Capital), for Binani Cement.
UltraTech had challenged the sale of Binani Cement to the Dalmia Bharat Group.
UltraTech's bid had reportedly been rejected by the resolution professional (RP) and a final decision will now be taken by the Kolkata bench of the NCLT. Both Ultratech and Binani Industries had alleged lack of transparency by the RP in the bidding process.
Binani Industries had questioned the conduct of the RP, stating that “it has been wrongfully denied of its rights to be fully informed about the insolvency process of the corporate debtor and to participate in the said process.” It had alleged that its comments had not been sought on values of the bids and resolution plans received, and ITS robustness.
Binani Cement owns and operates 6.25 million tonne per annum cement manufacturing facility in India and its subsidiaries own, and operates 3 MTPA clinker capacity in China and 2 MTPA cement grinding facility in Dubai.
On Monday, UltraTech shares ended down 1.6 per cent at Rs 3,996.60 on the BSE. Binani Industries was down 4.6 per cent at Rs 93.40 and Dalmia Bharat ended down 0.2 per cent at Rs 2,835.15.