Lenders’ Meet With Binani Industries Inconclusive

A meeting with lenders of Binani Cement Ltd. and representatives of Binani Industries Ltd., today to discuss an out-of-court settlement ended inconclusively, two people in the know told BloombergQuint on the condition of anonymity.

The meeting, which was called by secured lenders including Edelweiss Asset Reconstruction Company Ltd., Bank of Baroda, Canara Bank, State Bank of India, IDBI Bank and Bank of India, was to discuss the possible termination of the insolvency process initiated by Bank of Baroda against Binani Cement.

Under the insolvency process, a committee of creditors – which includes the six lenders named above – had declared a Dalmia Bharat-led consortium as the highest bidder. If the insolvency proceedings are terminated, Dalmia Bharat's bid for Binani Cement would not receive the requisite backing of lenders. Together, the six banks are owed Rs 4,041 crore, a major part of the indebted cement company's total liabilities.

While the lenders reviewed a plan submitted by Binani Industries to repay them, they did not make a decision. The CoC will meet again to discuss the offer further, but the date and time of the next meeting is yet to be confirmed.

As part of the documents it submitted, Binani Industries presented a letter of sanction that UltraTech Cement Ltd received from HDFC Bank for Rs 7,300 crore, the people quoted above said. According to a representative of Binani Industries, who is the first of the two people quoted above, the loan offered to UltraTech by HDFC Bank was on the condition that it would be used to pay off Binani Cement's lenders.

In March, Binani Industries entered into an agreement with UltraTech to sell 98.47 percent stake in Binani Cement for Rs 7,266 crore. The arrangement was on condition that the insolvency process against Binani Cement is terminated.

To be sure, UltraTech had also bid for Binani Cement under the insolvency process, but lost out to Dalmia Bharat.

The committee of creditors was asked by the National Company Law Tribunal and the National Company Law Apellate Tribunal to consider a settlement offer by Binani Industries. If the lenders do not agree to the offer, it is likely that Binani Industries will approach the Supreme Court for an intervention.