Firm on its decision of not revising its bid for acquisition of the hitherto bankrupt Binani Cement, the Dalmia Bharat Cement led consortium, on Friday, moved the NCLAT to obtain a stay order on the decision of the Kolkata bench of NCLT but failed in its attempt.
The NCLT, on Wednesday, had ordered the Committee of Creditors (CoC) to consider UltraTech’s revised bid and directed the CoC to reconsider Dalmia Bharat’s offer only if it quotes higher than that of UltraTech.
Against the near Rs 67 billion offer by Dalmia Bharat, which had emerged as the H1 bidder, UltraTech’s offer, after a second revision, stands at Rs 79.60 billion.
Sources close to Dalmia Bharat told Business Standard that it is “weighing options” but will not raise its bid under the current scenario.
“There is a limit to the cost of acquisition of the assets of Binani Cement. The offer quoted by Dalmia Bharat is just, but the offer of the hitherto unsuccessful bidder (UltraTech) is much higher than the value of assets of Binani Cement”, the source told this newspaper.
According to findings, the resolution professional (RP) had valued the assets of the potentially bankrupt Binani Cement at Rs. 23 billion upon liquidation but Dalmia Bharat’s offer is nearly three times the liquidation value and UltraTech’s offer is Rs 10.22 billion higher than that of Dalmia Bharat.
Furthermore, sources in Dalmia Bharat are of the view that the selection of the Dalmia Bharat led consortium was in accordance to the country’s legal framework under the IBC and other regulations and thus, there is no need to revise the offer higher.
“The lenders were also satisfied with our offer. Otherwise, why would they issue a letter of intent to us and send our proposal for NCLT’s approval? It proves that the offer is right and just”, a source in Dalmia Bharat told this business daily.
The Kolkata bench of NCLT, in its order, has clearly directed the Committee of Creditors (CoC) to consider the offers of both the parties but “bear in mind the object of the Code (IBC)”.
During the course of the hearings on this case, Jinan KR, member — judicial at the Kolkata bench of NCLT has observed that the objective of IBC is maximisation of value and pay off the creditors and other stakeholders as well.
Thus, in case Dalmia Bharat doesn’t raise its proposal to outbid UltraTech, there are high chances that the CoC may accept the proposal of UltraTech keeping in spirit the Tribunal’s order.
Sources who are opposing the takeover of Binani Cement by the Dalmia Bharat consortium are of the view that the Tribunal’s order clearly advises Dalmia Bharat to raise its bid or it may fall out of the race and eventually UltraTech’s proposal will finally make its way through.
NCLAT’s move now opens the possibility of the UltraTech proposal making it to the consideration stage of the CoC.
Sources suggested that following the outcome of NCLAT’s decision on Friday, the CoC may meet on May 5 or May 7 to consider UltraTech Cement’s proposal.
People aware of the development are of the view that prior to resorting to the Supreme Court, this was Dalmia Bharat’s last option to prevent the CoC meeting from taking place but NCLAT’s decision has upset it.
Previously, acting upon suggestions of the Tribunal for an out-of-court settlement with Binani Cement to clear off its dues, the lenders had considered the proposal other than that of Dalmia Bharat’s. It was then that Dalmia Bharat first wrote to the lenders reminding them of the legality of its selection as the H1 bidder and certain provisions of the IBC and guidelines from the Central Vigilance Commission (CVC) and the IBA.
Afterwards, Dalmia Bharat had also sent letters to CVC, the RBI, various public sector banks and others reminding them of the legality of its selection as H1 bidder.
However, in course of the proceedings in the court, it became evident that Dalmia Bharat’s argument primarily rested on the internal process document formulated by the CoC which drew in inspiration from CVC and IBA guidelines.
The Tribunal, however, has maintained that the law didn’t prevent modifications to the process document itself and it is not a legally binding document.
Why Dalmia Bharat is not keen to revise its offer
Has quoted resolution plan which is nearly three times the liquidation value of Binani Cement
Has stated that in case it quotes higher, the acquisition will not be financially viable
Has followed IBC and other legal procedures
CoC was satisfied with its offer
Implications of NCLAT refusal to stay NCLT’s order
CoC at will to consider UltraTech’s revised offer which is higher by Rs 10.22 billion than Dalmia Bharat’s
Dalmia Bharat’s offer may not be discussed or considered in the CoC meeting following NCLT’s directive
By the time NCLAT completes hearing, the CoC might decide upon or finalise the acquirer
Leaves Dalmia Bharat with the option to go to the Supreme Court after NCLAT completes hearing
The NCLT, on Wednesday, had ordered the Committee of Creditors (CoC) to consider UltraTech’s revised bid and directed the CoC to reconsider Dalmia Bharat’s offer only if it quotes higher than that of UltraTech.
Against the near Rs 67 billion offer by Dalmia Bharat, which had emerged as the H1 bidder, UltraTech’s offer, after a second revision, stands at Rs 79.60 billion.
Sources close to Dalmia Bharat told Business Standard that it is “weighing options” but will not raise its bid under the current scenario.
“There is a limit to the cost of acquisition of the assets of Binani Cement. The offer quoted by Dalmia Bharat is just, but the offer of the hitherto unsuccessful bidder (UltraTech) is much higher than the value of assets of Binani Cement”, the source told this newspaper.
According to findings, the resolution professional (RP) had valued the assets of the potentially bankrupt Binani Cement at Rs. 23 billion upon liquidation but Dalmia Bharat’s offer is nearly three times the liquidation value and UltraTech’s offer is Rs 10.22 billion higher than that of Dalmia Bharat.
Furthermore, sources in Dalmia Bharat are of the view that the selection of the Dalmia Bharat led consortium was in accordance to the country’s legal framework under the IBC and other regulations and thus, there is no need to revise the offer higher.
“The lenders were also satisfied with our offer. Otherwise, why would they issue a letter of intent to us and send our proposal for NCLT’s approval? It proves that the offer is right and just”, a source in Dalmia Bharat told this business daily.
The Kolkata bench of NCLT, in its order, has clearly directed the Committee of Creditors (CoC) to consider the offers of both the parties but “bear in mind the object of the Code (IBC)”.
During the course of the hearings on this case, Jinan KR, member — judicial at the Kolkata bench of NCLT has observed that the objective of IBC is maximisation of value and pay off the creditors and other stakeholders as well.
Thus, in case Dalmia Bharat doesn’t raise its proposal to outbid UltraTech, there are high chances that the CoC may accept the proposal of UltraTech keeping in spirit the Tribunal’s order.
Sources who are opposing the takeover of Binani Cement by the Dalmia Bharat consortium are of the view that the Tribunal’s order clearly advises Dalmia Bharat to raise its bid or it may fall out of the race and eventually UltraTech’s proposal will finally make its way through.
NCLAT’s move now opens the possibility of the UltraTech proposal making it to the consideration stage of the CoC.
Sources suggested that following the outcome of NCLAT’s decision on Friday, the CoC may meet on May 5 or May 7 to consider UltraTech Cement’s proposal.
People aware of the development are of the view that prior to resorting to the Supreme Court, this was Dalmia Bharat’s last option to prevent the CoC meeting from taking place but NCLAT’s decision has upset it.
Previously, acting upon suggestions of the Tribunal for an out-of-court settlement with Binani Cement to clear off its dues, the lenders had considered the proposal other than that of Dalmia Bharat’s. It was then that Dalmia Bharat first wrote to the lenders reminding them of the legality of its selection as the H1 bidder and certain provisions of the IBC and guidelines from the Central Vigilance Commission (CVC) and the IBA.
Afterwards, Dalmia Bharat had also sent letters to CVC, the RBI, various public sector banks and others reminding them of the legality of its selection as H1 bidder.
However, in course of the proceedings in the court, it became evident that Dalmia Bharat’s argument primarily rested on the internal process document formulated by the CoC which drew in inspiration from CVC and IBA guidelines.
The Tribunal, however, has maintained that the law didn’t prevent modifications to the process document itself and it is not a legally binding document.
Why Dalmia Bharat is not keen to revise its offer
Has quoted resolution plan which is nearly three times the liquidation value of Binani Cement
Has stated that in case it quotes higher, the acquisition will not be financially viable
Has followed IBC and other legal procedures
CoC was satisfied with its offer
Implications of NCLAT refusal to stay NCLT’s order
CoC at will to consider UltraTech’s revised offer which is higher by Rs 10.22 billion than Dalmia Bharat’s
Dalmia Bharat’s offer may not be discussed or considered in the CoC meeting following NCLT’s directive
By the time NCLAT completes hearing, the CoC might decide upon or finalise the acquirer
Leaves Dalmia Bharat with the option to go to the Supreme Court after NCLAT completes hearing
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