Ahead of auction, bidders of Reliance Capital express multiple reservations
Ahead of the much awaited second round of auction of Reliance Capital, scheduled now for 26 April after being postponed multiple times, both the potential bidders — Torrent Investments and IIHL of Hinduja Group — have expressed multiple reservations on the proposed auction and its terms and conditions.
According to sources, both the bidders have made it clear to the Committee of Creditors (COC) that unless the issues raised by them are duly resolved to their complete satisfaction, they are unlikely to participate in the second round of auction.
The COC is likely to meet again on Monday to address the concerns of bidders.
The biggest flash point between the bidders and lenders is regarding the finality of the resolution process after the second round of auction. Both the bidders want finality, certainty, transparency, no negotiation in value or on terms and conditions, after the second round of auction is over.
The two largest lenders of Reliance Capital, i.e., EPFO and LIC are against giving any such undertaking in advance. Both want to keep the room for further negotiations open in case the final bid value in the second round of auction is below the liquidation value of Rs 13,000 crores.
EPFO and LIC collectively hold over 30% voting rights in the COC.
The IIHL has also requested that the bidders who are participating in the auction should give an undertaking that they will not give a bid outside the Challenge Mechanism process. Similarly, bidders also want an undertaking from the COC that no bid outside the Challenge Mechanism will be considered by them. Both, Torrent and IIHL have taken a strong position on this.
The IIHL has requested that all the bidders must be EMD compliant, as well as IBC compliant, and the number of bidders must be notified 24 hours before the scheduled auction on Wednesday.
Torrent has requested to declare after every round that how many bidders are participating in the next round and the value of their bids.
COC has set a minimum bid amount of Rs 9,500 crore for the first round and Rs 10,000 crore for the second round, with an additional Rs 250 crore for subsequent rounds. The COC also has put a condition that all bids should have a minimum of Rs 8000 crores upfront cash payment.
In order to avoid uncertainty, both Torrent and IIHL have requested the COC that the resolution plans by each need to be made final and approved by the COC, before the auction can take place.
Also read: NCLT gives 3 more months to complete Reliance Capital insolvency process
