Lenders to Reliance Capital advised bidders that the challenge auction process will take place on January 19 though the National Company Law Tribunal (NCLT) will hear the Torrent Investments case on Thursday, people aware of the situation said.
According to the notice, changes in the financial proposal are not allowed after the challenge mechanism. Based on the Net Present Value (NPV), it also states that the threshold value will be Rs. 9500 crores, which will include Rs. 8000 crores in advance payment. As per the note, the ceiling price for the second round has been set at Rs 10,000 crore and for the third round at Rs 10,250 crore. To enter the race, bidders must submit offers that exceed the starting price.
Read also: Recession a looming threat to the global economy, World Bank warns
The highest bid in terms of NPV, which is determined after discounting future cash flows, will be disclosed by the administrator Nageswara Rao Y at the close of each round.
The total amount paid to creditors, including upfront and deferred payments, should be disclosed by the bidders. After the auction, they must provide the administrator with documents showing where the money came from.
Payments made by the bidders may not be in the form of instruments which are subject to change as to the payment amount or date.
Read also: Banks to raise record Rs 91,500 crore in debt capital so far in FY23: Report
Some reports claim that on January 11, 98% of lenders voted in favor of a fresh auction in the hope of getting a better offer. All offers are below the estimated liquidation price of Rs. 12500-13000 cr. Life Insurance Corporation is one of the largest loan holders of Reliance Capital, followed by Yes Bank and EPFO.
A total of Rs 25,334 crore has been accepted by the administrator to financial creditors with both secured and unsecured claims. Twenty finance companies ranging from insurance to broking are in Reliance Capital, which is going through the insolvency process.