In a committee meeting of creditors held on Monday evening, lenders asked the Reliance Industries and Asset Care and Reconstruction Enterprise (ACRE) team to submit a better proposal by Wednesday, people said.
In most cases, lenders negotiate with the highest bidder to maximize recovery from buyers of bankrupt companies, said one of Syntex’s lenders. The Reliance-ACRE offer is equivalent to a recovery of 36% for the lenders, excluding the 15% equity stake.
Reliance Industries did not respond to a request for comments.
In the second round of bidding, the Reliance Industries-ACRE team has offered ₹3,405 crore, which includes ₹2,700 crore as advance payment to lenders and 15% equity stake on conversion of ₹171 crore debt into equity, as per was previously reported by ET. , In addition, ₹72 crore will be distributed to business creditors and ₹11 crore to employees. ACRE Ares is an asset reconstruction company backed by SSG Capital.
In the first round, both offered lenders 10% equity stake and an upfront cash payment of Rs 2,280 crore.
The Reliance-ACRE team is among four applicants who submitted a resolution plan for the Gujarat-based textile manufacturing company. Among the other three bidders, Himmatsingka Ventures made an offer of ₹3,297 crore, Welspun Group’s unit made an offer of ₹3,102 crore and GHCL made an offer of ₹2,140 crore, as reported earlier.
Lenders expect the Reliance-ACRE team to improve the resolution plan by offering above liquidation value, said one of the persons cited above. If the offer exceeds the liquidation value, the resolution professional (RP) will invite the lenders to vote on the resolution plan. One lender said the liquidation price is 5-8% higher than the highest offer, but declined to give numbers due to privacy issues.
RP invited a second round of bidding early last month in hopes of getting a better offer that would be above the liquidation price.
Since the offers in the second round were also below the liquidation price, the lenders are now in talks with the highest bidder. In the past, lenders have considered various options such as holding Swiss challenge auctions and inviting fresh offers to get better offers.
The RP has accepted the claims of 27 financial creditors of ` 7,534.6 crore.
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