Reliance Capital may share RFRP with bidders by Wednesday or Thursday
New Delhi:
Lenders of debt-ridden Reliance Capital Ltd (RCL) can share the Request for Resolution Plan (RFRP) document with bidders by Wednesday or Thursday, and bids with high cash upfront payment component will get the maximum score as a share. The resolution process, the sources said.
The RFRP document sets out guidelines for submission and evaluation of a resolution plan. This is shared with all companies who have submitted Expression of Interest (EoI) for submission of financial bids.
RCL had given two options to all the bidders. Under the first option, companies can bid for Reliance Capital, which includes eight of its subsidiaries or clusters. The second option gave the company the freedom to bid for its subsidiaries either individually or in combination.
As per the final RFRP document of the lenders, the companies bidding for various businesses of RCL under option two can only bid in full cash. Sources said they will not be allowed to create a deferred payment structure.
Sources said companies bidding for RCL under option one will opt for all-cash bidding or a combination of cash advance cum deferred payment bids.
Sources said that as per the evaluation criteria, as proposed in the RFRP, all cash bids or bids with high cash advance payment component will get the maximum marks from the lenders.
The time limit for advance cash payment proposed by the bidders will be 90 days as per RFRP.
Any cash in the books of RCL or its subsidiaries will be received by the Lenders, and will not be considered for recovery of cash advance from the successful bidder.
Bidders offering all-cash bids will also be exempted from one of the valuation criteria, i.e. equity infusion to improve business operations, sources said, if the bidders bid all-cash.
Specifically, the bidders from various subsidiaries of RCL will have to form a consortium among themselves and then bid for the company level.
According to experts, this will reduce competition and also affect the recovery of lenders as the number of bidders will come down significantly.
Out of 55 EOIs received for RCL and several of its subsidiaries, 22 companies have expressed interest in acquiring Reliance Capital at the corporate level. Conversely, the rest have shown interest in various subsidiaries.
RCL has eight businesses which are in the block. This includes general insurance, life insurance, health insurance, securities business and asset reconstruction.
Since all subsidiaries of RCAP are running strong business, company administrators and lenders cannot invoke an IBC Compliance Resolution Plan for them.
Hence, sources said, the Committee of Creditors (CoC) in its last meeting, decided to ask all the bidders who have signed up for various subsidiaries to form a consortium among themselves and then bid for Reliance Capital at the company level. was asked to
Sources said these bidders will have to bid for the company completely in cash, which will affect the final recovery for the lenders.
Some of the prominent bidders of RCL include ICICI Lombard, Tata AIG, HDFC Ergo, Nippon Life Insurance, Bandhan Financial Holdings, Adani Finserve, Yes Bank, Blackstone, IndusInd International and Brookfield.