After the Dalmia Bharat group won Binani Cement in a closely fought and multi-cornered battle for the debt-laden buildings material company, the Indian market leader approached the bankruptcy court to seek a more transparent way of evaluating the bids “that maximise value for all stakeholders.”
The Aditya Birla Group-led cement company, which was almost on a par with the Dalmia bid, said that since the monetary value of the two offers fell in the same range, lenders should call upon both the bidders in a final round to modify their bids. Ultratech’s chief financial officer Atul Daga confirmed filing of the petition at the Kolkata chapter of the National Company Law Tribunal (NCLT). The hearing is likely to take place either on Thursday or Friday this week.
“The process should be more transparent that aims at value maximisation to all stakeholders,” a spokesperson for Ultratech confirmed, also said that after laying down rules regarding parameters that will be considered apart from the monetary value of the bid, the lenders have chosen to ignore their performance on them and have taken a final call based solely on the financials of the bid.
Dalmia Bharat officials couldn’t be immediately reached for their response.
The process document drafted by the lenders had laid down other criteria on which the bids would be evaluated apart from the monetary offer. This included turnaround expertise of the bidders, adverse regulatory orders in the last 5 years, current capacity, debt to EBITDA ratio etc.
A source aware of the proceedings, however, said that the document was a comprehensive one clearly stating that in case of an eventuality, the monetary value of the bid would be given preference even if the difference between the two bids was narrow.
Dalmia has offered Rs 6,700 crore for the 6.25 million tonne cement maker which includes Rs 6,313 crore in dues to lenders and another Rs 400 crore capital infusion for running the company. There were six bidders in the fray, and the lenders need not take any haircut on this loan.
There have been some reports regarding the lenders getting influenced by past penalties against Ultratech by the Competition Commission of India (CCI) and the spokesperson said that there is an apprehension that that might have been looked at “subjectively” in deciding to not award the asset to them.
“Legal issues need to be balanced with the commercial goals of IBC to maximise returns for creditors derived from an acquisition,” said Sumant Batra, managing partner at Kesar Dass, a law firm specialising in bankruptcies.