UltraTech Cement Ltd has agreed to provide Rs 7,266 crore ($1.1 billion) to the parent of Binani Cement Ltd, queering the pitch for a consortium of Dalmia Bharat Ltd and Bain Capital-Piramal Enterprises to acquire the bankrupt building materials maker.
The development came after UltraTech, India's biggest cement maker, challenged at the National Company Law Tribunal a decision by Binani Cement's creditors to select a joint venture of Dalmia Bharat and Bain-Piramal as the preferred buyer.
UltraTech, part of the billionaire Kumar Mangalam Birla-led diversified Aditya Birla Group, said in a stock-exchange filing on Monday it has entered into an in-principle commercial understanding with Binani Industries Ltd for acquiring its 98.43% stake in Binani Cement.
Ultratech, which lost the bid to Dalmia Bharat despite offering a higher sum, has alleged a lack of transparency in auction proceedings of Binani Cement. Dalmia Bharat and Bain-Piramal's India Resurgence Fund had offered Rs 6,300 crore for Binani Cement.
The Birla group company said Binani Industries is independently seeking termination of the insolvency proceedings against unit Binani Cement.
Ultratech also said it has agreed to issue a comfort letter confirming that it will provide Rs 7,266 crore to Binani's committee as per a resolution plan it had submitted for the acquisition of Binani Cement. The comfort letter will help Binani Industries in its application for termination of the proceedings under the Insolvency and Bankruptcy Code.
Binani Cement has been undergoing corporate insolvency resolution proceedings initiated by the National Company Law Tribunal since July 2017. The cement maker owes more than Rs 3,900 crore to a group of lenders that include Edelweiss Asset Reconstruction Company, State Bank of India, Canara Bank and Bank of Baroda.
Binani Cement, along with its subsidiaries, has global cement capacity of 11.25 million tonnes. Its India capacity is about 6.25 million tonnes.
The Indian operations includes a 4.8-million-tonne integrated plant and a 1.4-million-tonne split grinding unit, both in Rajasthan. Its overseas operations include a 2-million-tonne grinding unit in Dubai and a 3-million-tonne clinker facility in China.