Binani Cement acquisition: Lenders differ with UltraTech over claim amount
While some creditors support UltraTech Cement’s offer for Binani Cement acquisition, others claim the firm will have to repay liabilities worth over Rs8,000 crore
Mumbai: Lenders differ with UltraTech Cement Ltd over the claim amount that it has to pay if the insolvency proceedings of Binani Cement Ltd are terminated, according to two people aware of the matter.
While some creditors support UltraTech’s offer, they claim the company will have to repay liabilities worth over Rs8,000 crore.
“Some of the claims submitted by creditors were not eligible under insolvency proceedings. With Binani Cement looking to exit NCLT, the bidder should be able to repay the entire claim amount,” said one of the people cited earlier.
According to this person, the break-up of the liabilities is as follows: Binani Cement owes Rs6,500 crore to financial creditors, Rs700 crore to operational creditors, Rs1,000 crore is statutory liability, Rs400 crore towards interest accrued from time of resolution process till now and Rs100 crore towards cost of the insolvency proceedings. That amounts to Rs8,700 crore.
UltraTech, on the other hand, believes that the claim amount is less than Rs7,000 crore.
“Whatever is the admitted amount under IBC (Insolvency and Bankruptcy Code) that figure is finalized and should be paid off. The admitted amount is much less (than what some creditors are saying). Lenders’ liability is only Rs6,476 crore,” said K.K. Maheshwari, managing director, UltraTech Cement.
UltraTech Cement is negotiating with Binani Industries to acquire its 98.43% stake in Binani Cement outside the insolvency framework.
It informed the stock exchanges on Monday that it was willing to pay Rs7,266 crore for this stake, provided the insolvency proceedings were terminated, and agreed to provide a letter of comfort to Binani Industries. UltraTech is competing with a Dalmia Cements Ltd-led consortium that was chosen by the committee of creditors as the winning bidder.
“Where all creditors are paid in full, there is a case for equity value where IBC is silent. If at all IBC allows a new equity holder to buy the shares and pay creditors in full, the investor takes all liabilities of the enterprise and cannot get a guarantee of any liability cap that a resolution plan in IBC offers,” said Abhizer Diwanji, partner and national leader- financial services, EY India.
UltraTech’s offer to Binani Industries came up after the cement maker challenged the sale of Binani Cement to Dalmia Bharat, alleging lack of transparency in the bidding process.
It had complained to NCLT and had also written to Binani Cement’s resolution professional offering to increase its bid to about Rs6,900 crore from about Rs6,200 crore earlier.
Vijaykumar Iyer of Deloitte Touche Tohmatsu India Llp is the resolution professional overseeing the bidding.
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