Hinduja sweetens offer for RCap to counter Torrent group's winning bid

CoC decide whether Hinduja offer is legally valid or not as e-auction has ended

The Hinduja group today revised its bid for Reliance Capital by offering a net present value of Rs 9,000 crore for the company, after the e-auction ended earlier this week.

The Hinduja group's revised offer came after Torrent group emerged as the highest bidder for RCap in the auction held on Wednesday, with an offer of Rs 8,640 crore to the lenders. If Hinduja's revised offer is allowed by the lenders, then Torrent will likley object and take legal action, said a source close to the development.

Bankers said this is the first time ever that a transparent e-auction has been conducted under the Insolvency and Bankruptcy Code framework and any revision therein after the auction is over will have to pass the legal test.

"If any change in a bid by any party is allowed after the auction, then none of the e-auctions conducted by a government body hereafter will have any sanctity," said a bidder, asking not to be quoted.

In the lenders' meeting held in Mumbai today, one of the main concerns expressed was that if any change in NPV by any party is permitted after the auction is over, than the entire process will go into a legal quagmire and delay the whole debt resolution process. RCap was sent for debt resolution last November after it defaulted on debt worth Rs 24,000 crore.

The CoC therefore decided to defer the decision to its COC meeting scheduled in the first week of January, after taking a legal opinion.

Lenders said resolution plans are yet to be negotiated between them and the resolution applicants, and a voting on both offers will decide the fate of the company.

The Hinduja group had participated in the auction with an offer of Rs 8,150 crore but was beaten by Torrent. Cosmea-Piramal and Oaktree did not participate in the race. The Hinduja group did not reply to an email.

Creditors of Reliance Capital had offered two options for the bidding: Under the first option, companies had to bid for Reliance Capital as a whole, including its subsidiaries. Under the second option, bidders could separately go for individual businesses of Reliance Capital.

In an earlier round, Reliance Capital had received four binding bids at the company level, with the highest bid coming from a consortium of Piramal group and Cosmea Financial Holdings.

Valuation reports by Duff & Phelps and RBSA Advisors had pegged the liquidation value of Reliance Capital at Rs 12,500 crore and Rs 13,200 crore, respectively. The liquidation value of Reliance Capital is far higher than the value of the bids received.

According to Duff and Phelps, the liquidation value of Reliance General Insurance alone is worth Rs 7,000 crore, and Reliance Nippon Life Insurance is Rs 4,000 crore.

The National Company Law Tribunal has set the last date to complete the resolution process by January 31 next year.

Legal quagmire ahead
 

Torrent to object if Hinduja’s revised offer is allowed

Lenders to take legal opinion on Hinduja's revised offer as auction has ended

Lenders to vote on both offers by mid-January

NCLT deadline to close Reliance