Companies
Reliance Cap lenders back Hinduja group bid
Summary
Lenders to Reliance Cap have voted in favor of Hinduja Group's resolution plan, with 99% supporting the proposal. Under the plan, IndusInd International Holdings will offer an upfront cash amount of ₹9,661 crore ($1.3 billion) to the lenders. The approved offer indicates a recovery rate of 43%Mumbai: A majority of lenders to Reliance Capital Ltd have voted in favour of Hinduja Group’s resolution plan for the bankrupt firm, two people aware of the development said.
After the voting process for the cash-strapped non-banking financial company ended on Thursday, it was revealed that 99% of the lenders supported IndusInd International Holdings Ltd (IIHL)’s plan.
Under the proposed plan, IIHL will offer an upfront cash amount of ₹9,661 crore to the lenders. Considering the existing cash balance of ₹500 crore on Reliance Capital’s balance sheet, the lenders’ consortium will get ₹10,200 crore, which will be distributed among its members.
The administrator overseeing the bankruptcy proceedings has acknowledged claims of ₹23,666 crore from the lenders, and the approved offer from IIHL indicates a recovery rate of 43%.
IIHL’s resolution plan also takes into account the Credit Suisse-led bondholders, who had enforced their rights over 37% of the shares pledged to them by Reliance General Insurance Co, due to the failure of Reliance Home Finance to fulfil payment obligations. Reliance Capital had previously offered a corporate guarantee to the bondholders.
A second person cited above said the approved plan will be submitted to the National Company Law Tribunal (NCLT) next month before the deadline ends on 15 July.
However, Reliance Capital’s sale is awaiting the outcome of a plea filed by Torrent Investments in the Supreme Court, challenging the extension of the auction beyond the original deadline.
IIHL will also seek approvals from the Securities Exchange Board of India, the Insurance Regulatory and Development Authority of India and Reserve Bank of India, next week.
During the first auction on 21 December, Torrent Investments made the highest offer of ₹8,640 crore, while the Hinduja Group firm bid for ₹8,110 crore. However, within a day, Hindujas had revised its offer to ₹9,000 crore, prompting the Torrent Group to contest the move. The second auction was held on 26 April.
Even after the revised bids, Torrent’s and Hinduja’s offers are far below the liquidation value calculated by independent valuers.
While Duff and Phelps suggested a liquidation value of ₹12,500 crore, RBSA pegged it at ₹13,200 crore.
