Markets

IBC code should not set precedence of selecting someone who has bid a lower amount: Sameer Kaji, Binani Industries

In an interview with ET Now, Sameer Kaji, Senior Group Advisor, Binani Industries, says take into consideration what you have on the table by one of the resolution applicants who has made a higher bid.

Edited excerpts:

The Economic Times today reported that UltraTech has come out with a revised offer for Binani Cement. Have you got any formal communication from UltraTech yet?

It is not really an extra offer. What they have added is only working capital and that has made the bid closer to Rs 8000 crore. If you were to compare it with the earlier Rs 7618-crore offer, you will need to deduct the working capital component from the supposedly H1 bidder which would then go down to Rs 6350 crore. I say this because as one of the stake holders, we have not yet been shared the formal resolution plan which has been requested by the stakeholders even at NCLT. The numbers that I am saying are estimates on these supposedly H1 bidders.

Who according to you is a better suiter–UltraTech or the Dalmias?

To answer this question at this time may not be most appropriate. But if I were to go purely on experience, track record or trying to get into resolution process, I would say UltraTech but let us cross this bridge when we reach that stage.

Are you saying this because the UltraTech bid is better or do you think operationally the UltraTech Group could manage it better because the Dalmias also have a great track record and specially Puneet and his team of having done a fantastic job of running Dalmia Cement.

No I am not really opining at a personal level or anybodys management ability but at the end of the day, the IBC code looks at maximising value, ensuring end of the day benefits for every stakeholder. This is also a very important criteria that one should look at while making a selection. I feel the IBC code should not set precedence, being an evolving process of selecting someone who has bid a lower amount.

In fact, this is a rare instance where zero haircuts are being offered to every stakeholder whether secured financial, unsecured financial or even operating trade creditors and that has an important bearing on the final selection. We should not set an unhappy precedence in this evolving process. That is what I would like to say.

There are two issues out here which I think the Supreme Court is also trying to address: solving the matter with the lenders versus solving the matter with the creditors. How do you see the way forward over here to clear all the impediments and make a final decision because this has been long drawn?

If I recollect correctly, on 27th March at NCLT and 2nd April at NCLAT, we were told to discuss with the lenders on a possible out-of-court settlement. Based on this, we went back to the lenders. We had a meeting on 4th April. We discussed with them. We had another meeting on 6th or maybe 7.th That is when they said they are open to looking at a possible settlement but let the Supreme Court take a view. That is when we even paid the deposit of Rs 750 crore to all the lenders and went to the Supreme Court.

We filed the petition there for an out-of-court settlement or termination of the process. We withdrew the petition last Friday. The hearing at NCLT which is today and NCLAT on 19th are pending. Hence, we now go back to the process and await what happens today or on Thursday.

It is too early for me to come to a conclusion but the way things are moving, the issue of UltraTech or a final settlement is not settled with the creditors. Arent you confident that you would be able to arrive at a conclusion before the NCLT deadline because the clock is ticking there?

Clock is ticking but some of the days will be added back because you do not count the days when we are in court but you are right that is something which we need to take cognisance of. We may get five-seven days, but we need to take a decision quickly. You are right on that.

What is the status according to you because I am getting a lot of different interpretations including some off-the-record conversations which I have had with involved parties. What is the status quo at court, at your board and your relationship with UltraTech?

No, see the status at the court is a number of references or petitions have been filed. Some of them are coming up for hearing today and as the workday progresses, we will understand what is happening. Certain other petitions are yet pending which are being heard on Thursday, 19.th

These two are critical days for us as far as UltraTech is concerned. Like any other possible resolution applicant, UltraTech is one of them. The point to be noted here is there was a gap of six or seven days between a decision being taken by COC, UltraTech having revised their bid in the interim and as an independent person.

Just to make an independent assessment, COC should or could have considered the UltraTech bid because they had not yet met to really finalise and handover the thing as a recommendation to NCLT which they did on 14th March. This is the only relationship.

You spoke about how you have had recent out-of-court settlement of sorts. That has been where you have been working towards with the lenders, creditors and the parties involved. What was the proposal on offer and what is the option that you have at the back of your mind in terms of resolving this dispute? I would imagine that you would be perhaps a little aggrieved given how things are shaping up and perhaps the best offer is not being chosen?

Coming to the best offer, being an evolving process with no precedence I do respect the IBC Code but at the same time, one needs to take into consideration what you have on the table by one of the resolution applicants who has made a higher bid.

I feel, the process should consider that because on one hand you are talking of recapitalisation of banks, here you have a process where existing lenders are getting close to Rs 600 crore more. Besides these, operational trade creditors are getting Rs 400 crores more. So, in effect, you are getting close to Rs 1000 crore more for banks because the operational creditors have also borrowed money from similar banks. So, that will also tend to default in this proposal or any other proposal where value is not maximised. That is the point I am trying to make. How would one in a process which is new, which is evolving, which has so many possible options, look at it? The other way is to try and go for a re-bid, let it be opened back for the bidders to bid and maximise value. That is also an option which can be considered. This is a rare instance where a company has no haircut, in fact it is not insolvent, it is not really a bankrupt NTT. Why would people offer this kind of money if the company is insolvent or does not have potential?

My only fear is that I am not so sure how should one read into the demands of the creditors because if the creditors are not settled, clearly they may go to Supreme Court. They may get a stay and that may just extend the entire NCLT process and then the court has a deadline to meet. It may just get complicated there?

Yes, it could get complicated but this point can be better answered maybe on 19th when both the matters would be heard at NCLT and NCLAT. What I also understand from the court is that the operational creditors have filed their petition which is being heard in Supreme Court on Thursday. That is independent of this. We are not really concerned with that but that is also coming up on 19th. So you are right there is every possibility of things getting delayed or complicated.

What is UltraTechs stand on how they are proposing to clear the dues of the creditors?

As you may see UltraTech bid was Rs 7610 crore. Rs 7610 crore takes care of all legitimate liabilities of all stakeholders whether financially, secured creditors, financial unsecured, statutory dues or operational creditors. So, all of them will be settled as soon as a decision is made in their favour.

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Markets

IBC code should not set precedence of selecting someone who has bid a lower amount: Sameer Kaji, Binani Industries

In an interview with ET Now, Sameer Kaji, Senior Group Advisor, Binani Industries, says take into consideration what you have on the table by one of the resolution applicants who has made a higher bid.

Edited excerpts:

The Economic Times today reported that UltraTech has come out with a revised offer for Binani Cement. Have you got any formal communication from UltraTech yet?

It is not really an extra offer. What they have added is only working capital and that has made the bid closer to Rs 8000 crore. If you were to compare it with the earlier Rs 7618-crore offer, you will need to deduct the working capital component from the supposedly H1 bidder which would then go down to Rs 6350 crore. I say this because as one of the stake holders, we have not yet been shared the formal resolution plan which has been requested by the stakeholders even at NCLT. The numbers that I am saying are estimates on these supposedly H1 bidders.

Who according to you is a better suiter–UltraTech or the Dalmias?

To answer this question at this time may not be most appropriate. But if I were to go purely on experience, track record or trying to get into resolution process, I would say UltraTech but let us cross this bridge when we reach that stage.

Are you saying this because the UltraTech bid is better or do you think operationally the UltraTech Group could manage it better because the Dalmias also have a great track record and specially Puneet and his team of having done a fantastic job of running Dalmia Cement.

No I am not really opining at a personal level or anybodys management ability but at the end of the day, the IBC code looks at maximising value, ensuring end of the day benefits for every stakeholder. This is also a very important criteria that one should look at while making a selection. I feel the IBC code should not set precedence, being an evolving process of selecting someone who has bid a lower amount.

In fact, this is a rare instance where zero haircuts are being offered to every stakeholder whether secured financial, unsecured financial or even operating trade creditors and that has an important bearing on the final selection. We should not set an unhappy precedence in this evolving process. That is what I would like to say.

There are two issues out here which I think the Supreme Court is also trying to address: solving the matter with the lenders versus solving the matter with the creditors. How do you see the way forward over here to clear all the impediments and make a final decision because this has been long drawn?

If I recollect correctly, on 27th March at NCLT and 2nd April at NCLAT, we were told to discuss with the lenders on a possible out-of-court settlement. Based on this, we went back to the lenders. We had a meeting on 4th April. We discussed with them. We had another meeting on 6th or maybe 7.th That is when they said they are open to looking at a possible settlement but let the Supreme Court take a view. That is when we even paid the deposit of Rs 750 crore to all the lenders and went to the Supreme Court.

We filed the petition there for an out-of-court settlement or termination of the process. We withdrew the petition last Friday. The hearing at NCLT which is today and NCLAT on 19th are pending. Hence, we now go back to the process and await what happens today or on Thursday.

It is too early for me to come to a conclusion but the way things are moving, the issue of UltraTech or a final settlement is not settled with the creditors. Arent you confident that you would be able to arrive at a conclusion before the NCLT deadline because the clock is ticking there?

Clock is ticking but some of the days will be added back because you do not count the days when we are in court but you are right that is something which we need to take cognisance of. We may get five-seven days, but we need to take a decision quickly. You are right on that.

What is the status according to you because I am getting a lot of different interpretations including some off-the-record conversations which I have had with involved parties. What is the status quo at court, at your board and your relationship with UltraTech?

No, see the status at the court is a number of references or petitions have been filed. Some of them are coming up for hearing today and as the workday progresses, we will understand what is happening. Certain other petitions are yet pending which are being heard on Thursday, 19.th

These two are critical days for us as far as UltraTech is concerned. Like any other possible resolution applicant, UltraTech is one of them. The point to be noted here is there was a gap of six or seven days between a decision being taken by COC, UltraTech having revised their bid in the interim and as an independent person.

Just to make an independent assessment, COC should or could have considered the UltraTech bid because they had not yet met to really finalise and handover the thing as a recommendation to NCLT which they did on 14th March. This is the only relationship.

You spoke about how you have had recent out-of-court settlement of sorts. That has been where you have been working towards with the lenders, creditors and the parties involved. What was the proposal on offer and what is the option that you have at the back of your mind in terms of resolving this dispute? I would imagine that you would be perhaps a little aggrieved given how things are shaping up and perhaps the best offer is not being chosen?

Coming to the best offer, being an evolving process with no precedence I do respect the IBC Code but at the same time, one needs to take into consideration what you have on the table by one of the resolution applicants who has made a higher bid.

I feel, the process should consider that because on one hand you are talking of recapitalisation of banks, here you have a process where existing lenders are getting close to Rs 600 crore more. Besides these, operational trade creditors are getting Rs 400 crores more. So, in effect, you are getting close to Rs 1000 crore more for banks because the operational creditors have also borrowed money from similar banks. So, that will also tend to default in this proposal or any other proposal where value is not maximised. That is the point I am trying to make. How would one in a process which is new, which is evolving, which has so many possible options, look at it? The other way is to try and go for a re-bid, let it be opened back for the bidders to bid and maximise value. That is also an option which can be considered. This is a rare instance where a company has no haircut, in fact it is not insolvent, it is not really a bankrupt NTT. Why would people offer this kind of money if the company is insolvent or does not have potential?

My only fear is that I am not so sure how should one read into the demands of the creditors because if the creditors are not settled, clearly they may go to Supreme Court. They may get a stay and that may just extend the entire NCLT process and then the court has a deadline to meet. It may just get complicated there?

Yes, it could get complicated but this point can be better answered maybe on 19th when both the matters would be heard at NCLT and NCLAT. What I also understand from the court is that the operational creditors have filed their petition which is being heard in Supreme Court on Thursday. That is independent of this. We are not really concerned with that but that is also coming up on 19th. So you are right there is every possibility of things getting delayed or complicated.

What is UltraTechs stand on how they are proposing to clear the dues of the creditors?

As you may see UltraTech bid was Rs 7610 crore. Rs 7610 crore takes care of all legitimate liabilities of all stakeholders whether financially, secured creditors, financial unsecured, statutory dues or operational creditors. So, all of them will be settled as soon as a decision is made in their favour.

Original Article

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Your email address will not be published. Required fields are marked *