The lenders of Reliance Capital (RCap) are slated to meet on Tuesday to discuss the bids submitted by Torrent Group and Hinduja Group, and finalise the former Anil Ambani group company’s resolution process.
The legal advisors to the resolution administrator and committee of creditors (CoC), AZB & Partners and Luthtra & Luthra will present legal compliance of the plans submitted by the two final bidders. In addition, the financial Advisors – Deloitte to administrator and KPMG to CoC – will present evaluation plans of both bidders, sources close to the development said.
According to the deadline set by the National Company Law Tribunal, the bankruptcy court, RCap’s resolution should be closed by January 31.
Following the presentations, the CoC will have to finalise the winner based on a number of factors including the resolution plan, the deferred payment structure and the Net Present Value (NPV) offered by the bidders among others, one of the sources said.
In the e-auction conducted under the challenge mechanism, Torrent had presented a resolution plan for RCap with an NPV of Rs 8,640 crore, while that by Hinduja’s was at Rs 8,110 crore. Oaktree Capital, another resolution applicant, did not participate in the e-auction. Following the e-auction, Hinduja presented a revised resolution plan with an NPV of Rs 9,000 crore, with an offer to provide the entire sum upfront in cash.
In comparison, Torrent has offered only Rs 3,750 crore as upfront cash, which is 54% lower than Hinduja’s offer. The balance Rs 4,890 crore would be paid by Torrent over a five-year timeframe.
According to sources, a majority of the lenders are in favour of Hinduja’s offer as the lenders would be able to recover the entire money upfront. The CoC could also ask Torrent to match Hinduja’s offer before engaging again with both bidders to increase the value further.
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On its part, Torrent Group had objected to Hinduja’s revised bid offer stating it was made after the e-auctions ended and was a “blatant and arbitrary violation” of the challenge process. The CoC was to examine the offer and seek legal advice as the e-auction.
Earlier on December 13, the CoC had hiked the auction base price by nearly 25% to Rs 6,500 crore from the initial Rs 5,231 crore, which was the highest bid placed by Cosmea-Piramal consortium.
