UltraTech Cement on Monday said it has concluded a commercial understanding with Binani Industries to buy over 98 per cent stake in its cement manufacturing subsidiary Binani Cement Ltd (BCL) which is facing insolvency proceedings.
UltraTech, which was one of the resolution-plan applicants in the insolvency proceedings of BCL, agreed to issue a “comfort letter” to the debt-ridden cement manufacturer, confirming that it will provide funds amounting to Rs 7,266 crore to acquire the firm.
“The company has in-principle concluded commercial understanding with BIL (Binani Industries Ltd) for purchase of 98.43 per cent of the shareholding of BCL subject to termination of IBC proceedings, entering into definitive agreement and other customary and regulatory approvals,a the company said in a regulatory filing.
UltraTech, owned by Aditya Birla Group, said that the Binani Industries, which is independently seeking termination of the insolvency proceedings relating to its subsidiary BCL, approached the company for arranging funds to pay-off the lenders debts and other liabilities as admitted in the Insolvency proceedings against an offer of sale or transfer of its entire BCL equity shareholding.
BIL also requested the company to issue a “comfort letter” to be used as a support in its application seeking termination of the Insolvency and Bankruptcy Code (IBC) proceeding.
“The Board of Directors at its meeting held today (Monday) after considering the request made by BIL, has agreed to issue the comfort letter confirming that the company will provide funds amounting to Rs 7,266 crore, being the amount it had offered to the Committee of Creditors in terms of the resolution plan submitted by it for acquiring BCL….,” the filing said.
Meanwhile, during the hearing at the National Company Law Tribunal’s Kolkata bench on Monday, UltraTech Cement’s counsel alleged the company was “not called” to attend the Committee of Creditors (COC) meet on February 27, when the highest bidder (H1) was declared.
Its counsel also cited there was a “lack of transparencya.
According to him, the Aditya Birla Group company had submitted the revised bid to the Resolution Professional (RP), Vijaykumar V. Iyer, on March 8 and its counsel appealed before the court to consider its revised resolution plan for insolvent Binani Cement.
RP’s counsel, however, said during the hearing that the CoC considered the resolution plan of highest bidder on March 14 and the plan was approved by voting process.
“On March 14, the RP also put the revised resolution plan of Ultratech before the creditors’ committee, but it was not accepted,” counsel said.
The matter would be further heard on March 22.