Reliance Capital has the ability to share RFRPs with contractors by Wednesday or Thursday
New Delhi:
Reliance Capital Ltd (RCL) lenders that are heavily indebted are likely to share a Claims Settlement Plan (RFRP) document with contractors by Wednesday or Thursday and bid with a payment component High cash advance payments will receive maximum points as part of the settlement process, the sources said.
The RFRP document sets out guidelines for submitting and evaluating a resolution plan. It is shared with all companies that have submitted an Expression of Interest (EoI) for financial bid submission.
RCL presented two options to all bidders. Under the first option, companies can bid on Reliance Capital, which consists of eight subsidiaries or clusters of companies. The latter option gives the company the freedom to bid on its subsidiaries, individually or in combination.
According to the lender’s completed RFRP document, companies bidding for RCL’s various businesses under option two can only conduct all-cash tenders. The sources said they would not be allowed to implement the deferred payment structure.
Sources say that companies bidding on RCL under option one will choose to bid all in cash or a combination of prepaid cash and deferred bids.
According to the evaluation criteria, as suggested in the RFRP, an all-cash bid or a bid with a high cash upfront component should receive the maximum score from lenders, sources said. know.
The deadline for prepaid cash payments proposed by bidders will be 90 days in accordance with the RFRP.
Any cash on the books of RCL or its subsidiaries will be accrued to the lender and the same amount will not be considered a prepaid cash withdrawal from the successful auctioneer.
Bidders offering all-cash bids will also be exempt from one of the evaluation criteria, i.e. equity to improve Business Operations, the sources added. Borrowers will not consider this particular criterion while evaluating bids if bidders offer an all-cash bid.
Notably, contractors from different RCL subsidiaries will have to form a joint venture with each other and then bid at the corporate level.
According to experts, this will reduce competition and even affect the recovery of lenders as the number of bidders will decrease significantly.
Of the 55 EOIs received for RCL and its many subsidiaries, 22 have expressed interest in acquiring Reliance Capital at the corporate level. In contrast, the remainder showed interest in various subsidiaries.
RCL has eight businesses in the block. This includes general insurance, life insurance, health insurance, stock trading and property reconstruction.
Since all of RCAP’s subsidiaries are running productive businesses, the Company’s Administrators and lenders cannot invite them to plan an IBC compliance settlement.
As a result, sources said, at its most recent meeting, the Creditors Committee (CoC) decided to require all bidders who had bid for different subsidiaries to form a joint venture with each other. and then bid on Reliance Capital at the corporate level.
Sources say these bidders will have to make an all-cash bid for the company, which will affect the eventual recovery for the lenders.
Some of RCL’s prominent contractors are ICICI Lombard, Tata AIG, HDFC Ergo, Nippon Life Insurance, Bandhan Financial Holdings, Adani Finserv, Yes Bank, Blackstone, Indusind International and Brookfield.
