RCap bondholders likely to recover only 50% of investments

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Holders of Reliance Capital (RCap) debt are likely to recover half of their investments, with the value of cash flow-generating RCap assets potentially rising under RBI-appointed administrator, the Economic Times has reported.

Importance of subsidiaries 

The newspaper quoting industry executives said RCap investments in insurance, broking and asset reconstruction subsidiaries may yield good value. LIC and Employee Provident Fund Organisation (EPFO), collectively own about Rs 6,000 crore of RCap bonds, it added.

The debt resolution is now expected to move in a time-bound manner, the Economic Times quoted an unnamed industry executive as saying.

Total outstanding bonds are estimated to be around Rs 15,000 crore, according to the newspaper report which also said that the quantum of debt held through these instruments was Rs 16,273.53 crore as of September 30, 2019,.

Debenture trustee Vistra ITCL has started discussions with all stakeholders after Monday’s Reserve Bank of India  decision to supersede the board of Reliance Capital.

Reliance Capital is the fourth NBFC going to administrators under Insolvency and Bankruptcy Code (IBC) provisions.

IBD resolution

Last year, the committee of creditors had invited EoI for all or part of RCap’s stake in key subsidiaries and assets including Reliance General Insurance, Reliance Nippon Life Insurance, Reliance Securities and Reliance Asset Reconstruction Company.

Lenders and debt investors, however, could not reach a conclusion. The RBI administrator may now reach out to those old bidders who may still be interested due to regulatory intervention, the daily quoted an unnamed official of a financial services institution as saying.

The report also said a top mutual fund with estimated Rs 130 crore investment has side-pocketed its exposure to RCap.