In a new turn of events in the auction process of Binani Cement Ltd (BCL), UltraTech Cement, India’s largest cement company, has struck a Rs 7,266 crore ($1.11 billion) deal to buy BCL, which is facing insolvency proceedings in the bankruptcy court and takeover bid from another group — a consortium of Dalmia Bharat and Bain Piramal Resurgence Fund.
Dalmia Cement had earlier said its Rs 6,350 crore bid to buy Binani Cements Ltd (BCL) has been accepted by the lenders. Besides offering Rs 6,350 crore, Dalmia had also offered 20 per cent equity in Binani to the lenders. The latest offer from UltraTech will give it 98.43 per cent of Binani Cement, the firm said, adding a deal will only be concluded at the end of bankruptcy proceedings against Binani.
Binani Industries said that its board has decided to apply to the National Company Law Tribunal (NCLT) to terminate the insolvency proceedings commenced against its subsidiary BCL. “In consideration thereof, upon the termination of the insolvency proceedings of Binani Cements, the company has agreed and concluded in-principal commercial understanding to sell its entire 98.43 per cent shareholding interest in BCL to UltraTech Cements Ltd,” BIL said in a regulatory filing.
The development came after the company received the backing from UltraTech Cement to support it and BCL with funds required to pay off dues of the lenders.
UltraTech also said it had issued a letter of comfort to Binani confirming that it would provide funds for paying financial creditors, for the settlement or payment to trade creditors, and for payment of the corporate insolvency resolution process.
UltraTech said in a statement that BIL — the promoter firm of BCL — had approached it for arranging funds to pay-off the lenders. The company’s board agreed to issue ‘comfort letter’ to provide Rs 7,266 crore in return for 98.43 per cent stake in Binani Cement. “The board of directors at its meeting held today after considering the request made by BIL has agreed to issue the comfort letter confirming that the company will provide funds amounting Rs 7,266 crore being the amount it had offered to the CoC in terms of the resolution plans submitted by it for acquiring BCL,” said UltraTech Cement.
However, this would be “subject to termination of IBC proceedings, entering into definitive agreement and other customary and regulatory approvals”, it said. BIL has requested the company to issue a comfort letter which will be used as a support in its application seeking termination of the IBC proceeding.