All cash offers that guarantee high initial recovery for financial creditors will receive full marks in Reliance Capital’s proposed resolution offer evaluation.

According to sources familiar with the development, the valuation matrix will give the highest ratings to all cash offers, followed by net present value (NPV) including deferred payments and initial cash value.

The valuation matrix, which will form part of the Request for Resolution Plan Document (RFRP) for Reliance Capital, is being finalized by the Creditors’ Committee. The RFRP is expected to be shared with bidders later this week, no later than April 28.

The payment period for the initial cash payment would be a maximum of 90 days. It must be accompanied by a letter of support from the sponsor or a draft at the request of a letter of unconditional commitment from the bank.

Firms bidding for Reliance Capital at the corporate or option 1 level will be able to make an all-cash bid or a combination of upfront and deferred payment. However, only initial cash payment would be permitted for companies bidding under Option 2 or for various groups of companies or subsidiaries.

These companies will also have to form a consortium among themselves and then bid for the entire company.

Cash on the company’s books will revert to financial creditors and will not be considered part of the initial cash collection.

Sources said companies offering all-cash offerings will also be exempt from another assessment criterion of capital injection for improving business operations.

Reliance Capital’s administrator had released the final list of eligible potential resolution candidates for Reliance Capital last week. This included up to 54 companies of which 22 had bid for both options.

Reliance Capital’s total verified claims are estimated at ₹23,666 crore.

Published on

April 24, 2022