Lenders have refused to extend the deadline for repayment of Reliance Capital’s dues by the Hinduja group, suspecting a deliberate attempt by the group to delay implementation of the resolution plan, according to a person aware of the matter. The lenders have made it clear to the conglomerate that the deadline will not be extended beyond 27 May, the person added.
Earlier this week, the Hinduja group informed lenders that it is waiting for a few more regulatory and legal clearances before it makes the full payment of ₹8,000 crore in cash for the acquisition of Reliance Capital (RCap), according to another person aware of the matter. Both persons spoke on condition of anonymity.
As per the orders of the National Company Law Tribunal (NCLT) and Insurance Regulatory and Development Authority of India (Irdai), the implementation of the resolution plan is subject to all necessary approvals from other statutory, regulatory and judicial bodies in connection with this share transfer.
An email to the Hinduja group and WhatsApp message to the RCap administrator were unanswered till the time of going to press.
The first issue to crop up was that both Securities and Exchange Board of India (Sebi) and Irdai have still to approve the restructured consortium that will now acquire RCap. Earlier this month, the Hinduja group had changed the structure of the consortium bidding for RCap by inducting four new entities led by Aasia Enterprises to meet the foreign direct investment (FDI) ceiling requirement of 74% for the insurance sector.
Then, as the matter is still pending in the Supreme Court following a petition filed by the Torrent Group, which has opposed the second round of the auction for RCap, the payment cannot be made by 27 May, i.e. within three months of the NCLT approval.
“We are in no mood to extend the deadline. We don’t see issue of financial capability, but we see an issue with intent for closing the deal before the deadline. The group is giving several excuses not to repay the dues,” said the first person cited earlier. “We will put pressure on the group to close the deal,” he added.
This sudden turn of events is interesting as IndusInd International Holdings Ltd (IIHL)’s chairman Ashok Hinduja in a meeting with mediapersons on 3 May said that there is no further regulatory or judicial approval required apart from the Irdai one and the group can make the payment in 48 hours once this approval is granted. Hinduja had also clarified that the pending SC petition filed by the Torrent group is not a deterrent for them to go ahead with the deal.
“If the court had seen there is something wrong, they would have put a stay to the process,” said Hinduja, responding to a question on whether the SC order will have an adverse impact on the deal. “There is no stay as of now,” he added. On 27 February, the NCLT had approved the ₹9,650 crore resolution plan proposed by Mauritius-based IIHL for Reliance Capital, subject to the completion of conditions such as approval from Irdai for the insurance business, Sebi’s approval for the securities business and Reserve Bank of India’s (RBI) approval for the asset reconstruction company (ARC) business.
The RBI approval had come in November 2023, while Sebi approval came in April this year and Irdai approval came on 10 May. The delay in receiving the insurance regulator’s approval for the transfer of stake in Reliance Capital’s insurance subsidiaries to Aasia Enterprises, had created panic over the potential missing of the deadline.
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Published: 18 May 2024, 06:00 AM IST