RCap lenders raise concerns over Rs 7.3k cr debt term sheet offered by IIHL

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Lenders to debt-ridden Reliance Capital (RCAP) have raised concerns regarding the term sheet provided by the Hinduja Group firm IIHL for Rs 7,300 crore debt mobilisation to fund acquisition.

The committee of creditors (CoC) has expressed concerns that bankers to IndusInd International Holdings Ltd (IIHL) have imposed numerous conditions for offering Rs 7,300 crore debt and some of these conditions can only be met by IIHL after the resolution plan has been executed, sources said.

This makes the drawdown of funds needed to settle payments to the debtors of RCAP for the resolution plan virtually impossible, sources said.

Message to IIHL seeking comments on the issue did not elicit any response till the filing of the story.

Besides, sources said, the term sheets indicate that additional terms and conditions may be introduced in the final binding agreements.

The CoC has requested that IIHL should also provide these definitive documents for review, they said.

Notably, IIHL is raising Rs 7,300 crore through debt to finance the RCAP resolution plan, while the balance Rs 2,750 crore via equity or cash which IIHL has deposited in the COC's escrow accounts.

IIHL has appointed 360 One and Barclays for raising Rs 7,300 crore through debt. Out of this, 360 One has been mandated to raise Rs 5,000 crore, while Rs 2,300 crore is being raised by Barclays.

According to sources, the term sheets for Rs 7,300 crore were shared with the CoC on the directions of the National Company Law Tribunal, Mumbai.

The key conditions in the term sheets for the drawdown include pledge of equity shares of RCAP issued to IIHL, a first-ranking hypothecation over all the assets of RCAP and pledge of 100 per cent shareholding of Reliance Securities Limited with the new lenders.

Meanwhile, the CoC has also moved an application in the NCLAT seeking forfeiture of IIHL's Rs 2,750 crore lying in the escrow accounts, in case of default.

The CoC has also requested the tribunal to direct IIHL to pay interest on the debt component of Rs 7,300 crore from August 8 till the actual date of payment.

In November 2021, the Reserve Bank superseded the board of Reliance Capital on governance issues and payment defaults by the Anil Dhirubhai Ambani Group company.

The central bank had appointed Nageswara Rao Y as the administrator, who invited bids in February 2022 to take over the company.

Reliance Capital had a debt of over Rs 40,000 crore, and four applicants had initially bid with resolution plans.

However, the committee of creditors rejected all four plans for lower bid values and a challenge mechanism was initiated in which IIHL and Torrent Investments participated.