India: UltraTech claims select Binani creditors back its $1.1b bid

A pedestrian walks past UltraTech Cement Ltd. warehouses near Cochin Port in Cochin, India, on Friday, May 29, 2015. Photographer: Dhiraj Singh

Top Indian cement maker UltraTech said on Tuesday it had secured backing from some creditors of Binani Cement to buy the firm for $1.1 billion outside of a bankruptcy process, a move that is testing India’s new insolvency proceedings.

As part of the bankruptcy process, a panel made up of Binani‘s creditors has already approved a rival bid by a group including Dalmia Bharat and a fund backed by Bain Capital and India’s Piramal Enterprises.

But UltraTech said on Monday it had offered 72.66 billion rupees ($1.1 billion) for the firm after an approach by Binani Cement‘s parent, which it said would mean creditors were paid in full and the firm could end its insolvency process.

UltraTech‘s move will be a test case for India’s fledgling bankruptcy process, which typically does not allow talks between a firm that is being pursued in bankruptcy court and a prospective bidder.

UltraTech Chief Financial Officer Atul Daga told Reuters some of Binani Cement‘s lenders backed his firm’s bid, adding that the bankruptcy law allowed a company to withdraw from the process if creditors were paid off.

“There are creditors who are in favour of the bid because they were not getting full value from Dalmia,” Daga said in an interview, adding that UltraTech‘s offer would mean creditors received full repayment of their debts.

He declined to name the creditors backing UltraTech‘s bid.

Daga said UltraTech‘s bid in the bankruptcy process was about 7 billion rupees ($107 million) more than its rival.

He said the creditors‘ panel favoured the rival bid, citing UltraTech‘s lack of advanced approval from antitrust regulators.

“What’s the spirit of the Insolvency and Bankruptcy Code? It’s to maximise value,” Daga said, adding that UltraTech had applied to India’s antitrust watchdog the Competition Commission of India (CCI) and was confident of winning approval.

Vijaykumar Iyer, the court-appointed administrator for Binani Cement, declined to comment, citing the confidentiality of the proceedings.

Dalmia Bharat said in a filing late on Tuesday its offer for Binani Cement had been filed with the court for approval and it had submitted a bank guarantee to the administrator.

The bankruptcy court is scheduled to hear Binani‘s application seeking to withdraw from bankruptcy proceedings on Thursday, a senior adviser for the Binani group had told Reuters on Monday.

The adviser, Sameer Kaji, said Binani group was ready to raise the case to a higher court if the National Company Law Tribunal did not allow it to withdraw from bankruptcy proceedings.

It was not immediately possible to reach Binani group for comment on Tuesday.

Reuters

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.