Dalmia Bharat has sought the Central Vigilance Commission’s (CVC) intervention in the Binani CementNSE 0.00 % bankruptcy proceedings, arguing that the lenders’ reported move to allow the promoters to seek an out-of-court settlement for the debt-laden business violates CVC guidelines and circumvents the dedicated insolvency process.
In a letter to the CVC, the New Delhi-based cement maker wanted the commission to examine the matter and pass suitable guidelines in public interest as reports have started trickling that the lenders are having a change of heart, and could back the deal with UltraTech. The deal with UltraTech assures lenders a higher amount for the asset and 100% payout to both unsecured and secured creditors.
Listing the events since February 27, when Rajputana Properties (subsidiary of Dalmia Bharat Cement) was adjudged the highest bidder by lenders, Dalmia has gone on to outline instances that it believes go against the CVC guidelines.
“The unsuccessful bidder, UltraTech CementNSE 0.27 %, sent mails to CoC (committee of creditors) members revising its offer upwards on March 8, 2018 and requested CoC to consider its revised offer despite being well aware that the bidding process did not allow submission of revised bids. Shockingly, two PSU banks (EXIM Bank and SBI Hong Kong) who are part of the CoC petitioned the NCLT seeking directions to CoC that negotiations also be done with the H2 bidder. These actions are in clear violation of CVC guidelines for closed bids,” the letter said, mentioning two CVC circulars dating back to 2007 and 2010.
“The CVC will be taking its own action. Let the IBC be saved,” Mahendra Singhi, group CEOCement at Dalmia Bharat said.
The letter also said that apart from violating CVC guidelines and shaking public confidence in the bankruptcy code, the settlement between Binani and the lenders will also “send a wrong message to the international investing community, whose participation in resolving mounting NPAs of the banking sector is vitally important and in public interest.”
Dalmia was referring to the participation of Bain Capital Credit in the consortium that also includes Ajay Piramal’s Piramal Enterprises.
The lenders in a meeting on Saturday have decided to conditionally back the deal between promoter Binani Industries and UltraTech should it get Supreme Court approval. Binani Industries has deposited a sum of Rs 750 crore to show its commitment, along with a bank guarantee for the remaining amount of the total offer of Rs 7,266 crore. UltraTech will pay Binani Industries Rs 7,266 crore for the purchase of its 98.47% stake in Binani Cement.
Binani Cement owes about Rs 7,000 crore to lenders. Dalmia Bharat had offered Rs 6,700 crore for the asset.
Source: Economic Times