Lenders Seek Rs 8,000 Crore Cash Upfront For RCap's Second Auction

Indian lenders have asked bidders of Reliance Capital to offer a minimum of Rs 8,000 crore in cash upfront, in the second auction starting on March 20.

The creditors have also fixed the minimum bid amount at Rs 9,500 crore for the first round of the auction and Rs 10,000 crore for the second, with an additional Rs 250 crore for subsequent rounds.

Ahmedabad-based Torrent group and the Hinduja group are in the race to buy the company.

The auction is being held after the National Company Law Appellate Tribunal ordered the second auction to get maximum value for Reliance Capital assets. In the first auction in December, the Torrent group had emerged as the highest bidder with Rs 8,640 crore. But the Hinduja group had offered Rs 9,000 crore after the auction ended.

The lenders then decided to hold the second auction, but Torrent objected saying an auction can't be held on an open-ended basis, as it would dissuade genuine buyers. The Ahmedabad-based group moved the National Company Law Tribunal this January against the second auction, which ruled in its favour. The lenders then appealed to the NCLAT which ruled in their favour. Torrent is likely to move the Supreme Court against the NCLAT order.

Under the new bidding rules, each bidder will be given 30 minutes to make an offer in each round, which will close if all the participants submit bids before 30 minutes elapse. The administrator, based on instructions from the CoC, will announce the closure of each round, with a 30-minute gap between each round.

The bidders will have to submit their financial proposals. Lenders clarified that all payments to creditors (excluding any equity offered) would form part of the net present value (NPV) through upfront cash or deferred payment.

In case multiple financial proposals are received from any bidder in any round, the financial proposal with the higher NPV will be considered.

Reliance Capital was sent for debt resolution in November 2021 after it defaulted on loans worth Rs 24,000 crore.