Regarding the term sheet offered by the Hinduja Group company IIHL for the Rs 7,300 crore loan mobilisation to fund acquisition, lenders to the heavily indebted Reliance Capital (RCAP) have expressed concerns.
Concerns have been raised by the committee of creditors (CoC) regarding the constraints lenders have placed on IndusInd International Holdings Ltd (IIHL) in exchange for offering debt worth Rs 7,300 crore. Some of these conditions can only be fulfilled by IIHL following the implementation of the resolution plan, according to sources.
The sources stated that this effectively prevents the withdrawal of funds required to satisfy payments to RCAP’s debtors under the resolution plan.
Before the piece was filed, IIHL did not respond to a message asking for comments on the matter.
Furthermore, according to reports, the term sheets suggest that binding agreements may include extra terms and conditions.
According to them, the CoC has asked IIHL to send these conclusive records for examination as well.
In order to finance the RCAP resolution plan, IIHL is notably raising Rs 7,300 crore through debt and financing the remaining Rs 2,750 crore through equity or cash that it has placed in the COC’s escrow accounts.
Barclays and 360 One have been appointed by IIHL to raise Rs 7,300 crore through debt. Of this, Barclays is raising Rs 2,300 crore, and 360 One is required to raise Rs 5,000 crore.
On the National Company Law Tribunal’s, Mumbai, orders, the term sheets for Rs 7,300 crore were disclosed with the CoC, according to sources.
The term sheets for the drawdown contain several important clauses, including as the promise of RCAP equity shares to IIHL, a first-ranking hypothecation over all of RCAP’s assets, and the pledge of Reliance Securities Limited’s entire shareholding to the new lenders.
In the meantime, the CoC has filed a request with the NCLAT to have IIHL’s Rs 2,750 crore in escrow accounts forfeited in the event of failure.
Additionally, the CoC has asked the tribunal to order IIHL to pay interest on the Rs 7,300 crore debt component starting on August 8 and continuing until the actual payment date.
The Reserve Bank took over the Reliance Capital board in November 2021 because to concerns about governance and payment defaults by the Anil Dhirubhai Ambani Group entity.
Nageswara Rao Y, the administrator nominated by the central bank, requested offers to acquire the company in February 2022.
With more than Rs 40,000 crore in debt, Reliance Capital was the target of four bidders who first offered resolution proposals.
Torrent Investments and IIHL took part in a challenge mechanism after the committee of creditors rejected all four plans due to lower bid values.