Reliance Capital base price for e-auction hiked to Rs 6,500 crore
The insolvency resolution process of Reliance Capital is heading towards another stalemate after the Committee of Creditors (CoC) in its meeting on 13 December 2022 decided to increase the base price in the e-auction from Rs 5,231 crore to Rs 6,500 crore.
The move by the lenders have left the bidders in shock, and put a question mark on the success of the e-auction process itself. The four bidders left in the fray have termed the hike in base price as unrealistic.
As per the earlier proposal, the bid value of Rs 5231 crores quoted by the Cosmea and Piramal consortium was to be the base value or starting price for the proposed e-auction. However, the committee of creditors (CoC) has increased the base price of Reliance Capital to Rs 6,500 crore.
The e-auction, which was supposed to take place on 19 December, will now take place on 22 and 23 December.
Earlier, the committee of creditors had set the rules of e-auction, according to which the bidders will have to increase the bid value by minimum Rs 1,000 crore each in the first and the second round.
This means the first bid has to be a minimum Rs 7,500 crore and second Rs 8,500 crore.
Subsequently, in the third and fourth rounds, the bid amount has to go up by Rs 500 crore and Rs 250 crore, respectively.
Reliance Capital has 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 Group (Rs 4500 crore) and Oaktree (Rs 4200 crores).
Valuation reports by the Independent valuer Duff & Phelps has pegged the liquidation value of Reliance Capital at Rs 12,500 crore while RBSA has valued the company assets at Rs 13,200 crore.
The RBI-appointed administrator was not happy with the bids, given they were 60-70% lower than the liquidation value. The administrator was in favour of liquidation of the company assets rather than going for resolution. However, the lenders favoured resolution to liquidation.
Reliance Capital has a consolidated debt of about Rs 38,000 crore, with nearly Rs 25,000 crore of claims admitted by the administrator. The Reserve Bank of India (RBI) In November has superseded the board of Anil Ambani’s Reliance Capital over defaults in payments and serious governance concerns.
Also Read: Reliance Capital staring at liquidation?
