At Rs 10,000 crore, Anil Ambani's Reliance Capital recovery may be only 43%

Lenders to Anil Ambani-promoted Reliance Capital are likely to recover just about ₹10,000 crore after the winning bidder, Hinduja Group, declined to significantly improve its offer in the last round of bilateral negotiations that ended on Monday evening, people aware of the development told ET.

The recovery, totalling about ₹10,090 crore on factoring in the target company’s cash balances and the Hinduja offer, falls short of the ₹12,500-13,000 crore estimated liquidation value.

A Hinduja Group entity, IndusInd International Holdings, offered ₹9,650 crore in the extended auction held on April 26. Hinduja improved the offer by only ₹10 crore during the bilateral negotiations, the people cited above said.

In addition, the distressed financial services company has around Rs 430 crore as cash balances, which would be distributed among the lenders. This would add up to Rs 10,090 crore, equating to a 43% recovery for verified lenders.

Administrator Nageswara Rao Y has admitted Rs 23,666 crore in claims from verified creditors.

“Hinduja Group will submit a detailed resolution plan by next week while lenders are in the process of finalising distribution of the proceeds,” one of the persons cited above said. After this, the administrator will invite lenders to vote on the eligible plans.

However, resolution of Reliance Capital will be subject to approval from the Supreme Court, which is scheduled to hear in August the auction-related dispute between Torrent Investments, a bidder also in the fray in the earlier rounds.

At ₹10kcr, Rel Cap Lenders’ Recovery may be Only 43%

Crucial LIC, EPFO Roles

The stand by LIC, the Employees’ Provident Fund Organisation (EPFO) and JC Flowers Asset Reconstruction Co on approving the plan will be critical since they are majority debtholders. Yes Bank, an original Reliance Capital lender, sold its debt to JC Flowers ARC. A resolution plan can be approved only if 66% of creditors vote in its favour.

Separately, Credit Suisse-led bondholders have decided not to contest a decision by the National Company Law Tribunal (NCLT), which directed them to return the custody of Reliance General Insurance shares to the administrator, said the people cited above.

This has come as a major relief to the lenders that were worried the resolution might be delayed if Credit Suisse-led bondholders appealed against the tribunal’s order.

In 2018, Credit Suisse-led investors invested in bonds issued by Reliance Home Finance, a Reliance Capital unit. The home finance company failed to honour the payment on the due date.

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Roy Walsh

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