Binani and UltraTech try to bypass NCLT

Cement major UltraTech offers Rs. 7,266 crore to acquire Binani Cement but with the rider that the deal should happen outside the court.

In what seems to be a trial by fire for the country's insolvency laws, UltraTech has made an attractive offer for Binani Cement despite being rejected by the lenders. The Committee of Creditors approved Dalmia Bharat’s bid for Binani Cement which was lower than that of UltraTech citing anti-competition penalty levied by CCI on the company. UltraTech has cited lack of transparency by the insolvency resolution professional and challenged the Dalmia Bharat's bid and sale of Binani Cement to the company.

UltraTech informed the exchanges that Binani Industries had approached the company to fund Binani to pay-off its debts as it seeks to terminate the insolvency proceedings against Binani Cement which are being heard at NCLT's Kolkata Bench. Binani Industries and UltraTech have in-principle agreed upon a deal wherein the company will buy 98 per cent stake in Binani Cement. In-lieu of this agreement, UltraTech has given Rs. 7,266 crore letter of comfort, using which Binani Cement plans to apply for termination of insolvency proceedings.

Legal experts believe that at present there is no provision for termination or exiting in the insolvency laws, but since the law itself is involving, Binani Cement should be allowed to resolve his dues. Also, if the UltraTech’s offer is accepted after clearing the dues of creditor a sum of Rs. 600 crore is left for the equity shareholders.

Meanwhile, the National Company Law Tribunal (NCLT) will consider Dalmia's resolution plan on March 22. Although lender would be more than happy to accept UltraTech's offer, termination of the bankruptcy proceeding against Binani Cement can be done only by the Supreme Court.

At 11:14 hours, UltraTech Cement was quoting Rs. 3,947.95 per share, down 0.47 per cent, while Binani Cement was stuck in upper circuit at Rs. 98.05 per share, up by 4.98 per cent on Tuesday.