Insolvency: UltraTech keeps options open for Binani Cement takeover

Insolvency: UltraTech keeps options open for Binani Cement takeover

Kolkata, Jun 4: UltraTech Cement is keeping its options open regarding Binani Cement’s stressed assets, on other than the legal insolvency process.
This is despite it becoming the new H1 bidder under the law’s framework, replacing the Dalmia Bharat-led consortium, for a takeover.
The Aditya Birla Group company has deposited Rs 6.52 billion with the lenders, sources said. This was after the Committee of Creditors (CoC) to the insolvent entity had issued it a Letter of Intent (LoI). Yet, noted the sources, it had previously financed the directors of Binani Cement when they sought an out-of-court settlement with the lenders.
Based on recommendations of the Kolkata bench of the National Company Law Tribunal (NCLT), the directors of Binani negotiated a deal with the lenders, promising to pay back fully with interest as on date. The leading lenders asked Binani to deposit a bank guarantee, to prove the commitment. Based on this, UltraTech, financially backing this deal for an over 98 per cent stake takeover, deposited Rs 7.5 bn with the lenders.
However, the deal finally didn’t materialise. However, this Rs 7.5-bn guarantee, paid from UltraTech’s coffers, is still with the lenders.
And, the CoC of Binani is yet to decide what to do with that amount.
Some sources suggest it will be returned to UltraTech. Others think it might be adjusted against the final payment UltraTech needs to make before concluding a takeover.
Another source, a member of the CoC, opines that as long as the amount remains with the lenders, given to them as a bank guarantee for termination of the proceedings against Binani under the Insolvency and Bankruptcy Code (IBC), this option remained open. “Unless the lenders return this money or clearly state what to do with it, the option for an out-of-court settlement remains open,” this source said.
Stakeholders involved in the Binani takeover story say that given the still evolving uncertainties over the IBC, and the legalities in this case, UltraTech might wish to keep open all options.