Lenders from debt-ridden Reliance Capital Ltd (RCL) will likely share the Request For Resolution Plan (RFRP) document with bidders by Wednesday or Thursday at the latest, and bids with a high prepayment component will be maxed out as part of the resolution process, sources say. .
The RFRP document provides the guidelines for submitting and evaluating the resolution plan. It is shared with all companies that have submitted Expression of Interest (EoI) to submit financial bids.
RCL had offered all bidders two options. The first option would allow companies to bid for Reliance Capital, including its eight subsidiaries or clusters. The second option gave the company the freedom to bid for its subsidiaries, individually or in combination.
According to the lenders’ final RFRP document, companies bidding on RCL’s various businesses under option two can only make full cash bids. Sources said they should not make any deferrals.
Sources said companies bidding on RCL under option one would choose to make an all-cash offer or combine cash prepayment with deferred payment.
According to the evaluation criteria, as proposed in the RFRP, cash or high cash prepayment bids will receive maximum scores from the lenders, sources said.
The cash prepayment timeline proposed by the bidders is 90 days according to the RFRP.
All cash on the books of RCL or its subsidiaries accrues to the lenders, and the same will not be considered for the pre-cash recovery of the successful bidder.
The bidders offering all-cash bids will also be exempt from one of the evaluation criteria, i.e. equity infusion for business improvement, sources said. – cash offer.
In particular, the bidders of various RCL subsidiaries will have to form a consortium among themselves and then bid at company level.
According to experts, this will reduce competition and even affect the recovery for the lenders, as the number of bidders will drop significantly.
Of the 55 EOIs received for RCL and its multiple subsidiaries, 22 companies have expressed an interest in buying Reliance Capital at the corporate level. The rest, on the other hand, have shown interest in various subsidiaries.
RCL has eight companies on the block. This includes general insurance, life insurance, health insurance, securities trading and asset reconstruction.
Since all of RCAP’s subsidiaries operate healthy businesses, the company’s administrator and lenders cannot invite an IBC-compliant settlement plan for them.
Therefore, sources said, the Committee of Creditors (CoC) decided in their last meeting to ask all those bidders who had bid for different subsidiaries to form a consortium among themselves and then bid for Reliance Capital at a company level.
Sources said these bidders would have to make a cash offer for the company, which will affect the eventual recovery for the lenders.
Some of RCL’s prominent bidders include ICICI Lombard, Tata AIG, HDFC Ergo, Nippon Life Insurance, Bandhan Financial Holdings, Adani Finserv, Yes Bank, Blackstone, Indusind International, and Brookfield.