Displaying items by tag: Legal
India: The Supreme Court has blocked an out-of-court offer by UltraTech Cement for Binani Cement. Banks had offered conditional support to UltraTech’s bid, seeking indemnity from Binani Industries, the owner of Binani Cement, against any potential legal action, according to the Economic Times newspaper. A consortium led by Dalmia Bharat won an auction for Binani Cement with a bid of US$974m in early March 2018. However, UltraTech Cement then made a direct bid to Binani Cement a few weeks later.
Binani Industries had deposited US$115m with HDFC Bank to show its commitment to the deal with UltraTech, along with a bank guarantee for nearly US$1bn. However, Dalmia Bharat had sent letters to all the banks involved saying that any settlement initiated by them would be a breach of trust as they had entered into a contract with Dalmia.
Court confirms fine by Polish competition body
12 April 2018Poland: The court of appeal has supported a decision by the Office for Competition and Consumer Protection (UOKiK) in 2009 to fine six cement producers for cartel-like behaviour. However, the total fine has been reduced by one third to Euro67m from Euro98.3m, according to the Polish News Bulletin.
Grupa Ozarow is to pay Euro22.1m, Cemex Polska Euro16.6m, Gorazdze Cement Euro12.3m, Dyckerhoff Polska Euro7.51m, Cementownia Warta Euro5.55m and Cementownia Odra Euro2.87m. Some companies had their fines reduced by the court of appeal. Dyckerhoff will pay Euro7.5m instead of Euro13m and Cemex Polska will pay Euro5.88 less than the original fine. Some of the companies involved are considering appealing to the Supreme Court.
Indian government considering ban on petcoke use
11 April 2018India: The Supreme Court has been informed that the government is considering a ban on the use of petcoke by various industries. Additional Solicitor General A N S Nadkarni, representing the Ministry of Environment, Forest and Climate Change, told the court that a decision on the matter could be made within one month, according to the New Indian Express newspaper.
At present it is unclear whether the cement industry would be affected. However, if it was included in the ban, this potentially could be a problem for Shree Cement, which uses 100% petcoke in its fuels mix, according to India Infoline News Service. Additionally, UltraTech Cement, JK Cement, JK Lakshmi Cement and Mangalam Cement have petcoke usages in the range of 75 - 85% and would also be negatively affected.
India: Binani Industries says it has filed an application to stop the insolvency process for its subsidiary Binani Cement. It received an offer from UltraTech Cement to buy its majority stake in the cement producer in late March 2018, according to the Press Trust of India. However, the deal was subject to the ending of insolvency proceedings against Binani Cement whose Credit of Creditors (COC) led by Bank of Baroda had previously approved a bid from Dalmia Bharat.
Meanwhile, Rajputana Properties, a subsidiary of Dalmia Bharat, has asked the National Company Law Appellate Tribunal (NCLAT) to stay the settlement process considered by Binani Cement’s CoC. However the NCLAT refused the request. Previously the NCLAT asked the companies trying to buy Binani Cement to ‘amicably’ settle the dispute.
Creditors ask Binani Cement to seek approval from Supreme Court on UltraTech Cement deal
05 April 2018India: The creditors of Binani Cement have asked it to seek approval from the Supreme Court on an offer made by UltraTech Cement to buy the company outside of the on-going insolvency process. The lenders decided not to vote on UltraTech Cement’s offer, according to the Times of India newspaper. Instead, they asked for Binani Cement’s parent company, Binani Industries, to pay US$115m to show its commitment to the latest deal.
A consortium led by Dalmia Bharat won an auction for Binani Cement with a bid of US$974m in early March 2018. However, UltraTech Cement then made a direct bid to Binani Cement a few weeks later. Branches of the National Company Law Tribunal have since suggested that the companies settle the dispute ‘amicably.’ However, Binani’s creditors fear that Dalmia Bharat is likely to start legal proceedings without full court approval supporting UltraTech Cement’s direct offer.
The battle for Binani Cement
04 April 2018Persistence has paid off for UltraTech Cement this week. Although the deal is not complete, all the signs are pointing towards India’s largest cement producer buying Binani Cement despite losing an auction for it last month. Here’s a recap of what has happened so far.
In July 2017 the National Company Law Tribunal (NCLT) in Kolkata, a semi-judicial body that rules on issues relating to companies, started insolvency proceedings for Binani Cement. It followed a plea by one of the cement company’s creditors, the Bank of Baroda, that had an outstanding claim of around US$15m. The Kolkata bench of the NCLT rejected Binani Cement’s argument that the debt was tiny compared to the assets of its parent company Binani Industries of US$2.15bn. It then appointed an administrator, or resolution professional, called Vijaykumar Iyer, a partner at Deloitte Touche Tohmatsu India. More on him later on.
The subsequent auction of Binani Cement raised lots of interest both internationally and locally due to its production base. The company operates a 4.9Mt/yr plant at Binanigram in Rajasthan with two kilns and four mills. It also runs a 1.4Mt/yr cement grinding plant at Sirohi in the same state. Unusually though for an Indian producer it also runs a 2Mt/yr grinding plant at Jebel Ali, Dubai in the UAE and a 0.5Mt/yr integrated plant, Shandong Cement, in China.
Its products domestically in India include 43 and 53 grades Ordinary Portland Cement and Portland Pozzolana Cement, with the Bollywood film star Amitabh Bachchan as its brand ambassador. On that last point the Indian Supreme Court chastised Binani Cement in 2014 for not paying sales tax in Rajasthan whilst being able to hire Bachchan! However, given the ferocity of the struggle to buy Binani Cement maybe all that marketing of the brand paid off, giving the producer a much higher profile than it might otherwise have had.
Anyway, lots of companies showed interest in Binani Cement in the first round of bidding in late 2017. CRH, LafargeHolcim, HeidelbergCement, India Cement, Orient Cement, Ramco Cement, Shree Cement, UltraTech Cement and Piramal Group were all linked to the auction. Eventually UltraTech Cement, JSW Cement, Ramco Cement, HeidelbergCement India, Dalmia Bharat and a pair of Indian investors all submitted bids and JSW Cement emerged as the winner with a bid of US$919m. However the emergence of an additional liability of around US$250m scuppered that auction when it turned out that Binani Cement had offered a corporate guarantee for the acquisition of a fibreglass asset in Europe known as 3B in 2012 by Binani Industries. By February 2018 the next auction was in progress and this time Dalmia Bharat Cement and UltraTech Cement led the race. Dalmia Bharat won the second auction with a bid of around US$1.03bn made in a consortium with Bain Capital’s India Resurgent Fund and Piramal Enterprises.
At this point the situation might have conceivably slowed down. Instead, UltraTech Cement kept on fighting and queried the entire bidding process. It then made a direct offer of US$1.11bn to Binani Cement in the form of a so-called ‘comfort letter’ that Binani Industries used to stop the insolvency process. At the same time it received approval from the Competition Commission of India in its bid for Binani Cement, the previous absence of which was one of the reasons its bid against Dalmia Bharat was rejected.
Indian company law now faced a dilemma over how a bankruptcy works given that the NCLT was meant to be in charge. A way out was found though when the NCLT in Kolkata and the National Company Law Appellate Tribunal both allowed the bidders to settle the dispute ‘amicably.’ To add further confusion the administrator Vijaykumar Iyer also alleged right in the middle of the final tussle between Dalmia Bharat and UltraTech Cement that fraudulent transactions had been made by Binani Cement! Whether this has any further implications remains to be seen.
At this stage nobody is likely to declare UltraTech Cement the winner of Binani Cement until it actually picks up the keys to the cement plants. Perhaps not even then in case of any lingering legal issues! UltraTech Cement clearly views Rajasthan as a growth area given the tenacity with which it has gone after Binani Cement. It operates two integrated plants in the state and is building two more of its own. After its long journey in buying plants from Jaiprakash Associates in 2017, UltraTech Cement is starting to look like the cement producer that simply won’t take no for an answer.
India: The National Company Law Appellate Tribunal (NCLAT) has allowed the companies fighting to buy Binani Cement to ‘amicably’ settle the dispute. The tribunal was hearing a petition filed by Binani Industries, which holds over 90% of Binani Cement, according to the Press Trust of India. It followed a suggestion by the National Company Law Tribunal of Kolkata that also asked Binani Cement to consider taking an out-of-court offer between the cement producer and its lenders.
A consortium led by Dalmia Bharat won an auction for Binani Cement with a bid of US$974m in early March 2018. However, UltraTech Cement then made a direct bid to Binani Cement a few weeks later.
India: National Company Law Tribunal (NCLT) of Kolkata has asked Binani Cement to consider taking an out-of-court offer between the cement producer and its lenders. The NCLT has asked the committee of creditors (COC) to take up a proposal by Binani Industries, the parent of Binani Cement, to pay off all lenders' dues for 'appropriate consideration', according to the Economic Times. Binani Industries had approached the NCLT, seeking to stop insolvency proceedings after getting a ‘letter of comfort’ from UltraTech Cement, which proposed to pay US$1.11bn to help Binani pay off its debts and buy a 98.43% stake in the company.
The decision appears to pave the way for UltraTech Cement to win the on-going fight for control of Binani Cement. A consortium led by Dalmia Bharat won an auction for Binani Cement with a bid of US$974m in early March 2018. UltraTech Cement then made its direct bid to Binani Cement a few weeks later.
US: Cemex has settled a lawsuit that accused it of discharging polluted storm water runoff from its West Sacramento cement terminal in California into the Sacramento River. The cement producer has agreed to implement an infiltration basin to treat runoff from its unit, according to the Sacramento Business Journal newspaper. It will also make a donation of US$40,000 in grants to environmental projects in the Sacramento-San Joaquin River Delta and pay the legal fees of the plaintiff, the California Sportfishing Protection Alliance. The alliance had originally sought US$88m from Cemex.
Local Lafarge Syria employees reported dead or missing
22 March 2018Syria: An investigation by the Agence France Presse has found that one local employee of Lafarge in Syria was killed and another has been missing for five years. According to the news agency, Syrian mechanic Yassin Ismail, who was employed at Lafarge's plant at Jalabiya, was kidnapped by jihadist fighters in 2013. He was subsequently executed, according to relatives and former work colleagues. Another mechanic Abdul al-Homada, was disappeared in Aleppo in 2013 while attempting to collect his salary.
LafargeHolcim is being investigated in France over claims that Lafarge Syria had paid extremist groups to keep its Jalabiya cement plant operational after the outbreak of war in Syria. Six former Lafarge executives have been charged with financing a terrorist organisation. Those managers could also face prosecution for endangering the lives of their local Syrian employees after 11 of them filed their own lawsuit alleging that Lafarge put financial profit before their personal safety.