UltraTech Cement to pick up 98% stake in Binani Cements

Mumbai: UltraTech Cement Ltd (UCL) has entered into an in-principle agreement with Binani Industries Ltd (BIL) to pick up 98.43% stake in its subsidiary Binani Cements Ltd (BCL), subject to termination of insolvency proceedings, the company informed the stock exchanges on Monday.

UCL is competing with rival Dalmia Bharat Ltd, which has been chosen as the highest bidder, to bid for BCL. Vijaykumar Iyer of Deloitte Touche Tohmatsu India LLP is the resolution professional overseeing the bidding.

“The Board of directors at its meeting held today, after considering the request made by BIL has agreed to issue the comfort letter confirming that the company will provide funds amounting to Rs 7266 crores, being the amount it had offered to Committee of Creditors in terms of the Resolution Plan submitted by it for acquiring BCL,” said UltraTech, in its letter to the exchanges.

UCL also said that BIL has requested the company to issue a letter of comfort confirming to infuse funds to pay off its debtors. “The company has in-principle concluded commercial understanding with BIL for purchase of 98.43% of the shareholding of BCL subject to termination of IBC proceedings, entering into definitive agreement and other customary and regulatory approvals,” the notice added.

The cement manufacturer had challenged lenders’ decision to sell BCL to its rival Dalmia Bharat Ltd, citing lack of transparency in the bidding process.

Mint had reported on 19 February that both UltraTech and Dalmia had submitted bids of roughly around Rs6,000 crore each, with included upfront cash payments, as well as an offer of close to 20% stake in Binani to lenders.

Although Dalmia Bharat’s bid was marginally higher, UltraTech had raised the offer by Rs700 crore, taking its overall offer above Rs7,000 crore. Despite a higher bid, lenders questioned UCL about a past penalty of Rs1,175.49 crore imposed by Competition Commission of India (CCI). This was part of an overall penalty of Rs6,700 crore on 11 cement companies, including UltraTech, ACC, Ambuja Cements Ltd, Ramco Cements Ltd and JK Cement Ltd, as well as industry body Cement Manufacturers’ Association for indulging in cartelization.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.