U.S.-based Oaktree, one of the four bidders in the race for debt-ridden Reliance Capital resolution process, may exit if its demands are not taken care by lenders, sources said.
According to sources, Oaktree has sought Reliance Capital’s financial results till December 2022, followed by a four week extension, till Jan. 31, 2023, for conducting the auction process.
An query emailed to Oaktree did not elicit any response till filing of the story.
Lenders, sources said, are not inclined to accept this demand of the bidder.
As per the National Company Law Tribunal order, lenders have to complete the resolution process of Reliance Capital by Jan. 31, 2023.
Hence, sources said, there is a little possibility of four weeks extension.
According to sources, the lenders fear that Oaktree will not participate in the auction process to be held in the week starting Dec. 19.
With Oaktree’s exit, only three bidders will be left in the race for Reliance Capital resolution — Cosmea-Piramal consortium, Hinduja, and Torrent Group.
The Committee of Creditors is expected to meet on Friday to finalise the auction process and rules for the proposed e-auction, sources added.
In a meeting held on Tuesday, sources said, the lenders discussed two options — closed-cover auction and e-auction. But the largest lenders EPFO and LIC, which collectively control 35 per cent of the voting rights, rejected the closed-cover auction and voted in favour of e-auction.
Under e-auction, lenders have two options, either to go for ascending auction or descending auction.
Sources said that foreign banks are pushing for descending auction. In the descending auction, the base price will be a fair value of Rs 17,000 crore.
In the ascending auction process, which is favoured by LIC and EPFO, the base price will be Rs 5,300 crore – the highest bid value quoted by Cosmea and Piramal consortium.
The Reserve Bank of India had on Nov. 29 last year superseded the board of RCL in view of payment defaults and serious governance issues.
The RBI appointed Nageswara Rao Y as the administrator in relation to the Corporate Insolvency Resolution Process of the firm.
Reliance Capital is the third large non-banking financial company against which the central bank has initiated bankruptcy proceedings under the IBC.
The other two were Srei Group NBFC and Dewan Housing Finance Corporation. The RBI subsequently filed an application for initiation of CIRP against the company at the Mumbai bench of the National Company Law Tribunal.
In February this year, the RBI-appointed administrator invited expressions of interest for the sale of Reliance Capital.