UltraTech offers to buy Binani Cement, tests India's new bankruptcy law (updated)

BIL Vyapar

19/03/2018 14:30

* UltraTech: approached by Binani to buy it outside
bankruptcy  
    * Binani says UltraTech offer would mean no haircuts for
creditors
    * Bain-backed group earlier won creditors' approval for
Binani bid

 (Adds details from press conference, context)
    By Sankalp Phartiyal and Devidutta Tripathy
    MUMBAI, March 19 (Reuters) - India's top cement maker
UltraTech Cement Ltd  ULTC.NS  on Monday offered $1.1 billion to
buy Binani Cement Ltd days after a rival bid in what could be a
test case for the country's fledgling bankruptcy process.
    UltraTech, part of the Aditya Birla conglomerate, said
Binani Cement's parent Binani Industries  BINZ.NS  was seeking
termination of the insolvency proceedings against the cement
unit and had approached UltraTech to arrange funds for
paying-off bank debts and other liabilities.
    UltraTech's announcement comes days after a group comprising
cement maker Dalmia Bharat  DALA.NS  and a fund backed by Bain
Capital and India's Piramal Enterprises  PIRA.NS  said its bid
for Binani Cement had won approval from the company's panel of
creditors. http://bit.ly/2ppoTYH
    The surprise move by UltraTech, which had also participated
in the bidding process for Binani Cement under the process
overseen by the National Company Law Tribunal (NCLT), will be a
test case for the country's new bankruptcy law.
    After India enacted its first formal insolvency law in 2016
to help cut record bad loans at its lenders, the central bank
has steered some of the biggest loan defaulter companies for
resolution under the bankruptcy court process. The government
also tightened laws to keep errant company backers from trying
to win back their companies.
    Binani has sought to withdraw the company from ongoing
bankruptcy proceedings at the NCLT, Sameer Kaji, a senior
advisor for the group, told a televised news conference on
Monday, adding that the UltraTech offer would mean no haircuts
for the creditors.
    When asked why the company was trying to resolve its debt
outside the bankruptcy process, Kaji said: "We are questioning
the basic process. We are saying that the process was not run in
a transparent way".
    Vijaykumar Iyer, the administrator appointed by the court
known in India as interim resolution professional, did not
immediately answer calls and a message seeking comment.
    The NCLT will hear Binani's plea on March 22, Kaji told
Reuters.
    UltraTech's latest 72.66 billion rupee ($1.11 billion) offer
will give it 98.43 percent of Binani Cement, the company said,
adding a deal will only be concluded at the end of bankruptcy
proceedings against Binani.
    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 shares ended 1.3 percent lower on Monday in a
Mumbai market  .NSEI  that fell about 1 percent. Binani
Industries fell 4.8 percent. 
     
($1 = 65.1850 Indian rupees)

 (Reporting by Sankalp Phartiyal and Devidutta Tripathy
Editing by Louise Heavens)
 ((sankalp.phartiyal@thomsonreuters.com; +91-22-61807186;
Reuters Messaging:
sankalp.phartiyal.thomsonreuters.com@reuters.net))