Reliance Capital resolution process now a three-horse race?
As the Committee of Creditors (CoC) of Reliance Capital meet on 9 December 2022, what direction the resolution process could it give.
It is said that the CoC is not going to listen to the two new demands of Oaktree, one of the four bidders left in the race.
Oaktree has asked for Reliance Capital’s financial results till 31st December 2022 as well as extension of the e-auction process by four weeks to 31 January 2023.
The lenders are not keen to listen to Oaktree’s demand as the National Company Law Tribunal (NCLT) has given strict deadline of completing the resolution process of Reliance Capital by 31 January.
This may force Oaktree to withdraw from the race. Oaktree has quoted a bid price of Rs 4,200 crore for acquiring Reliance Capital’s assets.
If Oaktree does exit from the race, then only three bidders — Cosmea-Piramal consortium, Hinduja, and Torrent Group — will be left to participate in the e-auction.
The lenders of Reliance Capital in a meeting held on 6 December 2022 decided to conduct an e-auction for the bidders.
The Committee of Creditors (COC) will again meet on Friday (9 December) to finalize the auction process and rules for the proposed e-auction.
In the meeting held on 6 December, the lenders discussed two options – closed cover auction and e-auction, but the largest lenders like EPFO and LIC, who collectively control 35% of the voting rights, rejected the closed cover auction and voted in favour of e-auction.
Within e-auction, lenders have two options, either to go for ascending auction or descending auction. Foreign banks are pushing for descending auction wherein the base price will be Rs 17,000 crore.
In the ascending auction process, which is favoured by LIC and EPFO, the base price will be Rs 5,300 crore, the highest bid value quoted by Cosmea and Piramal consortium.
Reliance Capital had received four binding bids on 28 November, which was the last date for submitting the bids. The highest bid of Rs 5,231 crore has been submitted by a consortium of Cosmea Financial and Piramal. Hindujas with Rs 5,060 crore has emerged as the second highest bidder, followed by Torrent Investment (Rs 4500 crore) and Oaktree (Rs 4200 crores).
Reliance Capital owes its lenders Rs 25,400 crore and the liquidation value of its assets has been arrived at Rs 13,000 crore.
Also read: Reliance Capital staring at liquidation?
