New Delhi: Sources said lenders to debt-ridden Reliance Capital (RCAP) will meet on Monday to address the concerns of the bidders ahead of the second round of auction on April 26. Torrent Investments and IndusInd International Holdings Limited (IIHL), both the potential bidders of the Hinduja Group, have expressed several reservations about the proposed auction and its terms and conditions.
According to sources, both the bidders have made it clear to the Committee of Creditors (CoC) that they will not participate in the second round of auction unless the issues raised by them are duly resolved to their complete satisfaction. Not likely. ,Also Read: Ladakh’s New Football Stadium Is Anand Mahindra’s Inspiration For Not Being A ‘Couch Potato’,
The CoC is likely to meet again on Monday to address the concerns of the bidders. They said that both the bidders do not want finality, certainty, transparency, price or any negotiation in terms and conditions after the second round of auction is over. ,Also Read: Latest FD Rates 2023: SBI Vs HDFC Vs ICICI Vs PNB Vs Canara Bank Compared,
Employees’ Provident Fund Organization (EPFO) and LIC, the two biggest lenders to Reliance Capital, are against giving any such advance commitments.
Sources said both want to keep the room open for further talks in case the final bid price in the second round of auction falls below the liquidation price of Rs 13,000 crore.
EPFO and LIC collectively hold more than 30 per cent voting rights in the CoC.
IIHL has also requested that the bidders participating in the auction should give an undertaking that they will not bid outside the challenge mechanism process. Similarly, the bidders also want an undertaking from the CoC that any bid outside the challenge mechanism will not be considered by them.
Sources said both Torrent and IIHL have taken a hard line on this and want the process to be in line with the Insolvency and Bankruptcy Code (IBC) and the number of bidders to be informed 24 hours before the auction scheduled for Wednesday. Needed
Sources said Torrent has requested to announce after each round how many bidders are participating in the next round and the value of their bids.
The CoC has set a minimum bid amount of Rs 9,500 crore for the first round and Rs 10,000 crore for the second round, with an additional Rs 250 crore for subsequent rounds.
Sources said the CoC has also put a condition that all bids should have an upfront cash payment of at least Rs 8,000 crore.
Meanwhile, the Mumbai bench of the National Company Law Tribunal (NCLT) has extended by three months to July 16 the deadline for completing the resolution process of RCAPs.
The Reserve Bank of India (RBI) superseded the board of Reliance Capital on November 29, 2021 in view of payment defaults and serious governance issues. The RBI appointed Nageswara Rao Y as the administrator in connection with the Corporate Insolvency Resolution Process (CIRP) of the firm.
Reliance Capital is the third large non-banking financial company (NBFC) against which the central bank has initiated bankruptcy proceedings under the IBC. The other two were Srei Group NBFC and Dewan Housing Finance Corporation (DHFL).
The central bank subsequently filed an application for initiation of CIRP against the company in the Mumbai bench of NCLT. In February last year, the RBI-appointed administrator had sought expressions of interest for the sale of Reliance Capital.