Lenders of debt-ridden Reliance Capital Ltd (RelCap) are likely to share the Request For Resolution Plan (RFRP) document with bidders by Wednesday or Thursday and bids with a high upfront cash payment component will get the maximum score as a part of the resolution process, sources said.
The RFRP document sets the guidelines for the submission and evaluation of the resolution plan and is shared with all the companies that have submitted Expression of Interest (EoI) .
RelCap had offered two options: Under the first option, companies could bid for Reliance Capital, including its eight subsidiaries or clusters. The second option gave the companies freedom to bid for its subsidiaries, individually or in a combination.
As per the RFRP document finalised by the lenders, companies bidding for Relcap’s different businesses under option two, can only make all-cash bids and they will not be permitted to make deferred payment structur.
Companies bidding for RelCap under option one, will have the choice of making an all-cash bids or combination of upfront cash cum deferred payment bids, sources said. As per the evaluation criteria, as proposed in the RFRP, all-cash bids or bids with high upfront cash payment component will get maximum scores from the lenders, sources said.
The timeline for the payment of upfront cash proposed to be paid by the bidders will be 90 days as per the RFRP.
Any cash in the books of RelCap or its subsidiaries, will accrue to the lenders and the same will not be considered towards upfront cash recovery from the successful bidder.
The bidders offering all cash bids will also be exempt from one of the evaluation criteria i.e. equity infusion for improvement of business operations, sources said, adding, the lenders will not take into account this particular criteria while evaluating the bids, if the bidder makes an all cash bid.
Notably, the bidders of different subsidiaries of RelCap will have to form a consortium amongst themselves and then bid for the company level.
According to experts, this will reduce competition and even impact the recovery for the lenders as the number of bidders will significantly go down.
Out of 55 EOIs received for RelCap and its multiple subsidiaries, 22 companies have expressed interest in buying Reliance Capital at the company level, while the rest have shown interest in different subsidiaries.
RelCap has eight businesses that are on the block. This includes general insurance, life insurance, health insurance, securities business, and asset reconstruction.
