Earlier this year, the lenders selected Authum Investment and Infrastructure Limited (Authum) as the successful bidder to acquire RCF and RHF.
The resolution plan has been approved by the lenders that are part of the Inter-Creditor (ICA) under the Prudential Framework for Resolution of Stressed Assets of the Reserve Bank of India, 2019.
While Reliance Capital owns 100% of the capital of Reliance Commercial Finance (RCF), it is the majority shareholder of Reliance Home Finance (RHF).
The consolidated debt of Reliance Capital is Rs 40,000 crore and the resolution of the two lending activities – RCF and RHF will have an impact on the consolidated debt of Reliance Capital, Ambani said.
“Between these two companies (RCF and RHF), there is a debt of more than Rs 20,000 crore, and it will be deconsolidated from the balance sheet of Reliance Capital. Thus, only two transactions for RHF and RCF will reduce our debt by 50 per cent or Rs 20,000 crore, ”Ambani said at Reliance Capital’s annual general meeting (AGM).
After that, Reliance Capital will have around Rs 15,000 crore of secured debt represented by NCDs (non-convertible debentures) or debenture holders, and around Rs 5,000 crore of unsecured and secured debt, he added.
He said Authum would pay around Rs 2,200 crore for RCF and almost Rs 2,900 crore for RHF.
“As we now complete the appropriate formalities to complete these transactions, we are confident, based on regulatory and other approvals, that these two companies will move forward with a change in leadership and control,” Ambani said.
He said Authum is committed to retaining all RCF and RHF employees.
There are 20,000 bondholders between the two companies and those investors will receive 100% of their dues, he said.
Ambani said the Debentureholder Committee and Debenture Trustee of Reliance Capital issued a tender through expressions of interest last year for the monetization of nine key assets under the Reliance umbrella. Capital.
However, due to the pandemic and the challenges facing the financial services industry, the progress of the asset monetization process over the past 20 months has not been in line with the expectations of all of the company’s shareholders, a he declared.
For this reason, he said, “the Bondholders’ Committee and Trustee have now released a new 180-day timeline to move the asset monetization agenda forward, starting in July 2021.”
The board of directors is currently considering various options, in addition to the option of the debentureholder committee, on an expedited resolution to maximize the value of all of its assets, he said.
All of the companies under Reliance Capital, such as Reliance Nippon Life Insurance, Reliance General Insurance, Reliance Securities, among others, have performed very well and have not been hampered by the challenges facing the financial services industry, he informed the shareholders.
All of these companies are fully capitalized and there is no need to inject funds, he added.
Ambani said nearly 90 percent of Reliance Capital’s value came from two insurance companies – Reliance General Insurance and Reliance Nippon Life Insurance.
Reliance General Insurance is 100 percent owned by Reliance Capital. Reliance Nippon Life Insurance Company is a joint venture between Reliance Capital (51 percent) and Nippon Life Insurance, Japan (49 percent).
“The value of our two insurance companies and the interest we have in these two companies is well above Reliance’s overall guaranteed debt of the capital,” Ambani said.
He also assured shareholders that there would be no discount or distressed sale of any of the company’s assets.