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Mumbai-based NBFC Cosmea Financial Holdings has pulled out of the race to buy debt-laden Reliance Capital Ltd (RCL) as part of the bankruptcy bidding process, sources said. Cosmea in conjunction with the Piramal group has made a bid to buy the erstwhile Anil Ambani group company, but sources say Piramal is still interested in the auction process.
According to sources, the consortium submitted the highest binding offer Reliance Capital Assets.
Planned electronic auction for The RCL, as approved by the committee of creditors (CoC), was scheduled for December 21, and the exit of the highest bidder ahead of the auction was a major shock to the lenders.
The reason for the withdrawal, according to the sources, is attributed to the significantly changed contours of the bidding process, whereby a significant increase of about 1,500 million dinars above the highest bid is required to start the basic bid at the auction itself. participating in the process.
The CoC has set a minimum value of Rs 6,500 crore for the auction, which is Rs 1,500 crore more than the net present value (NPV) of the Cosmea-Piramal resolution plan.
Further, sources said, the increments in the auction process for the second and third rounds have also been set at a very high level of Rs 1,000 crore each. After the exit, there are now only three players left in the race – Hinduja, Torrent and Oaktree.
Hinduja’s bid of Rs 5,060 crore, including an advance payment of Rs 4,100 crore, was the second highest bid. The The NPV of Hinduja’s offer was 4,800 crores. Torrent and Oaktree quoted 4,500 crores and 4,200 crores.
They offered an advance payment of 1,100 kroner and 1,000 million dinars. The NPV of Torrent’s resolution plan was 4200 kroner and Oaktree’s was 2600 kroner.
On November 29 last year, the Reserve Bank of India (RBI) replaced the board of RCL over late payments and serious governance issues. The RBI has appointed Nageswara Rao I as the administrator in connection with the corporate insolvency resolution process (CIRP) of the firm.
Reliance Capital is the third major non-banking financial company (NBFC) to be insolvent by the central bank under the Insolvency and Bankruptcy Code (IBC).
The other two were Srei Group NBFC and Devan Housing Finance Corporation (DHFL). The RBI subsequently filed an application to initiate CIRP against the company at the Mumbai bench of the National Company Tribunal (NCLT). In February this year, an RBI-appointed administrator invited expressions of interest to sell Reliance Capital.
The decision of the Mumbai bench of the National Company Tribunal (NCLT) came on a petition filed by the State Bank of India. The lender approached the bankruptcy court in 2019 after the company defaulted on more than Rs 221 crore. Supply of essential goods and services to the company should not be interrupted, suspended or interrupted during the moratorium period under CIRP, the NCLT bench of members HV Subba Rao and Anuradha Sanjai Bhatia said in an order dated December 16.
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