UltraTech Cement cleared all dues owed to the creditors of Binani Cement on Tuesday, taking possession of the latter’s units in India, UAE and China.
The board of directors at Binani Cement has been reconstituted, with the company now a wholly owned subsidiary of UltraTech, the latter informed the BSE stock exchange.
This follows the Supreme Court’s ruling on Monday, which approved UltraTech’s resolution plan in this regard, dismissing the rival contention from Rajputana Properties (a Dalmia Bharat-led consortium), which had challenged the selection of UltraTech’s plan by the National Companies Law Appellate Tribunal (NCLAT).
“We have received the full payment from UltraTech and no amount is now due,” cofirmed a lead lender to Binani. The highest payment by UltraTech was to Edelweiss Asset Reconstruction Company, of Rs 29.93 billion. Followed by IDBI Bank, which with its Dubai branch received a little over Rs 23 billion. EXIM Bank, which had earlier petitioned the National Company Law Tribunal (NCLT) against the Rajputana offer, got Rs 6.69 billion. Had Dalmia Bharat’s plan been approved, this bank would have got Rs 4.5 billion, against a claim of Rs 6.2 billion.
“UltraTech’s plan was to pay the financial lenders more than the verified amount which was admitted by the Resolution Professional (RP) when Binani Cement was admitted (under insolvency proceedings) in NCLT,” said Sameer Kaji, senior advisor on corporate strategy at Binani.
The total of claims which were verified and admitted by the RP was Rs 64.69 billion in the financial creditors category. Total payout to the financial creditors is a little over Rs 68.5 billion. “Not only did none of the lenders take any haircut (write-off) under this plan but interest as on April 30 has also been paid,” added the lender quoted earlier. Binani Cement’s India unit at Sirohi, Rajasthan, has consolidated capacity of 6.25 million tonnes per annum (mtpa), comprising a 4.85 mtpa integrated unit and a 1.4 mtpa split grinding one. According to a report from Centrum Broking, Binani has a large amount of good quality limestone reserves at the current locations, as well as space for expansion.
“In case UltraTech plans to dispose off the international assets, these can be monetised for Rs 15 billion. Thus, the implied value for the Indian assets would work at Rs 10 billion per mt of installed capacity,” went the report. Its plants in China and the UAE have an installed capacity of two mtpa each.
After resolution plans were invited for insolvent Binani, the initial offer from UltraTech (whhich is part of the Aditya Birla Group) was Rs 65 billion, inferior to Dalmia Bharat’s. It had then revised the offer to outbid the latter but just after the formal deadline. The Committee of Creditors (CoC) rejected the revised bid and the Dalmia Bharat consortium was selected. Its plan was sent to NCLT for approval in March this year. UltraTech, Binani, SBI Hong Kong, EXIM Bank, the operational creditors and other stakeholders, however, opposed this. On May 2, after a prolonged hearing, the NCLT ordered the CoC to approve UltraTech’s plan. Dalmia Bharat’s would be considered only if it matched (in effect, outbid) the offer from UltraTech.
Dalmia Bharat then went to the NCLAT. Which, in a recent order, reasoned that the insolvency law’s aim was to provide a resolution process rather than preferring liquidation, in a time-bound manner for maximisation of the value of assets to promote entrepreneurship, credit availability and to balance the interest of various stakeholders. It, therefore, okayed UltraTech’s offer of Rs 79.5 billion, dismissing Rajputana Properties’ Rs 69.32 billion offer. The SC approved.
Source: November 20, 2018, Business Standards