Debt-ridden Reliance Capital Ltd (RCL) lenders are likely to share the Request for Resolution Plan Document (RFRP) with bidders by Wednesday or Thursday, and bids with a high initial cash payment component will get the maximum score as part of the resolution process, sources said.
The RFRP document defines the guidelines for the submission and evaluation of the resolution plan. It is shared with all companies that have submitted an expression of interest (EOI) to submit financial offers.
RCL had offered two options to all bidders. Under the first option, companies could bid for Reliance Capital, including its eight subsidiaries or clusters. The second option gave the company the freedom to bid for its subsidiaries, either individually or as a group.
According to the finalized RFRP document from the lenders, companies bidding for RCL’s various activities under option two can only bid for cash. Sources said they would not be allowed to set up a deferred payment structure.
Sources said companies bidding for RCL under Option 1 would choose to make an all-cash offer or a combination of initial cash and deferred payment offers.
According to the evaluation criteria, as proposed in the RFRP, all-cash offers or offers with a high initial cash payment component will get maximum scores from lenders, sources said.
The initial cash payment term offered by bidders will be 90 days in accordance with the RFRP.
Any money on the books of RCL or its affiliates will revert to the lenders and will not be considered for initial cash collection from the successful bidder.
Bidders with all-cash bids will also be exempt from one of the evaluation criteria, namely the injection of equity for the improvement of business operations, sources said, adding that lenders will not take into account. take this particular criterion into account when evaluating bids if the bidder makes a whole. – cash auction.
In particular, bidders from the various RCL subsidiaries will have to form a consortium among themselves and then bid at company level.
This will reduce competition and even impact recovery for lenders, experts say, as the number of bidders will drop significantly.
Of 55 expressions of interest received for RCL and its multiple subsidiaries, 22 companies have expressed interest in acquiring Reliance Capital at the corporate level. On the other hand, the others have expressed their interest in different subsidiaries.
RCL has eight companies that are on the block. This includes general insurance, life insurance, health insurance, corporate actions and asset reconstruction.
As all RCAP affiliates run sound businesses, the company’s administrator and lenders cannot invite an IBC-compliant resolution plan for them.
Therefore, according to sources, the Committee of Creditors (CoC), in its last meeting, decided to ask all the bidders who had bid for different subsidiaries to form a consortium among themselves and then bid for Reliance Capital at the level of the company.
Sources said these bidders are expected to make an all-cash offer for the company, which will impact the final payback for lenders.
Some of RCL’s top bidders are ICICI Lombard, Tata AIG, HDFC Ergo, Nippon Life Insurance, Bandhan Financial Holdings, Adani Finserv, Yes Bank, Blackstone, Indusind International and Brookfield.