Reliance Capital's lenders have decided to hold a second round of auction for the company under bankruptcy law on April 4, two people directly familiar with the matter said.
For the April 4 auction, the lenders have decided to set the base bid at Rs 9.5 billion on a Net Present Value basis, with a minimum cash component of Rs 8 billion. The bid amount will increase by Rs 500 crore in the following round, and by Rs 250 crore in subsequent rounds, under the terms of the challenge process, according to the people familiar with the matter.
Compared to this, the company's liquidation value is understood to be close to Rs 12,500 crore, according to the lenders. It wouldn't be entirely surprising if bids were below this, people involved in the matter said.
โWe will invite the four suitors to participate but it is a two-horse race. The Piramal-Cosmea Financial Holdings consortium and Oaktree are unlikely to be involved, so it is now between Hinduja and Torrent,โ said one of the company's lenders.
However, there are challenges. Recently, Hinduja Group informally indicated that it intends to retain its old offer of Rs 8,110 crore for Reliance Capital, as offered in Round 1, and withdraw the higher offer of Rs 8,950 crore it had made earlier. late, according to two people familiar with it.
The second challenge would be the participation of Grupo Torrent, which has moved the highest court to question the lenders' decision to hold a second round of auction when the highest bidder was declared in the first. Since he has contested the move, he can opt out of the second round, or participate with his original offer, one of the people involved speculated.
Reliance Capital has been in the spotlight amid ongoing litigation over the legality of the proposed second auction, which has been challenged by one of the suitors, Torrent Investments.
Torrent Investments had emerged as the highest bidder with a settlement plan of Rs 8,640 crore in the first round. However, after the conclusion of the round, the other suitor, Hinduja Group, through its company Indusind International Holdings Ltd (IIHL), sent lenders a revised offer of around Rs 9,000 crore in current value terms. net (NPV), prompting lenders to seek another round of bidding, which was challenged by Torrent at NCLT.
While NCLT ruled in favor of Torrent, the lenders subsequently turned to the higher court, the National Companies Act Court of Appeal, which reversed NCLT's order and ruled in favor of the lenders.
Thereafter, Torrent moved to the Supreme Court on the matter on March 13, but was denied any injunctive relief by suspending the second round of bidding on Monday. The court allowed the lenders to proceed with the second round, subject to the court's final orders. However, the matter is only scheduled for hearing next August, which gives the process an air of uncertainty.
Reliance Capital is facing claims of Rs 25,334 crore from various creditors under IBC, and its lawyers had previously argued that around Rs 45 crore in interest was rising every week with the delay in resolution.
