Reliance Capital: Lenders invite fresh bids on April 4
The liquidation value of Reliance Capital is pegged at around Rs 12,500 crore. The second round of the auction is expected to attract the likes of Torrent, Hinduja Group, Piramal-Cosmea, and Oaktree. However, Piramal and Oaktree are unlikely to participate in the second round after bowing out of the first.
The lenders to Reliance Capital have decided to hold a second round of auction for the company under the bankruptcy law on April 4, said two people directly in the know of the matter.
For the April 4 auction, lenders have decided to set the base bid at Rs 9,500 crore on a Net Present Value basis, with a minimum cash component of Rs 8,000 crore. The bid amount will go up by Rs 500 crore in the subsequent round, and by Rs 250 crore in the rounds after that, as per the terms of the challenger process, as per people in the know.
Compared to this, the liquidation value of the company is understood to be close to Rs 12,500 crore, as per the lenders. It would not be entirely surprising if the offers were to be below this, people involved in the matter said.
“We will invite all four suitors to participate but it is a two-horse race. Piramal-Cosmea Financial Holdings consortium and Oaktree are unlikely to participate, so it is between Hinduja and Torrent now,” said one of the lenders to the company.
However, there are challenges. Recently, Hinduja Group informally indicated that it intends to retain its old offer of Rs 8,110 crore for Reliance Capital, as offered in Round 1, and withdraw the higher offer of Rs 8950 crore it had later made, as per two people in the know.
The second challenge would be the participation of Torrent Group, which has moved the top court to question the lenders’ decision to hold a second round of auction when it was declared the highest bidder in the first round. Given that it has contested the move, it may choose not to participate in the second round, or participate with its original offer, speculated one of the people involved.
Reliance Capital has been in the limelight amid ongoing litigation on the legality of the proposed second auction, which has been challenged by one of the suitors, Torrent Investments.
Torrent Investments had emerged as the highest bidder with a resolution plan of Rs 8,640 crores in the first round. However, post the conclusion of the round, the other suitor — Hinduja Group — via its company Indusind International Holdings Ltd (IIHL) sent lenders a revised bid of close to Rs 9,000 crores in net present value (NPV) terms, prompting the lenders to seek another round of bidding, which was challenged by Torrent in NCLT.
While NCLT ruled in favour of Torrent, lenders subsequently moved to the higher court- National Company Law Appellate Tribunal- which overturned the NCLT order and ruled in favour of lenders.
Thereafter, Torrent moved the Supreme Court in the matter on March 13 but was refused any interim relief by means of a stay on the second round of bidding on Monday. The court allowed the lenders to proceed with the second round, subject to the final orders of the court. However, the matter is only listed for hearing in August next, which lends an air of uncertainty to the process.
Reliance Capital is facing claims of Rs 25,334 crore from various creditors under IBC, and its lawyers had previously argued that about Rs 45 crore of interest was mounting each week with the delay in resolution.
First Published: Mar 27, 2023 8:16 PM IST
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