LIC's move to sell RelCap's debt irks lenders

New Delhi: Days ahead of the deadline to submit binding bids, LIC's move to sell its Rs3,400 crore secured principal debt of cash-strapped Reliance Capital Ltd (RCL) to an asset reconstruction company (ARC) has irked its lenders and bidders.

The last date for submitting binding bids for Reliance Capital Ltd (RCL) and its subsidiaries is November 28. LIC is conducting a Swiss Challenge process to invite bids from Asset Reconstruction Companies (ARCs) to sell its exposure in RCL, sources said, adding prospective bidders will be asked to better the offer. However, the sources said, Asset Care and Reconstruction Enterprise will have the first right to match the counteroffer. The last date to submit the bids is November 25, while the deadline for submission of binding bids for RCL is November 28. According to the sources, the Committee of Creditors (CoC) of RCL is upset as to why LIC has initiated a parallel process to sell its debt so close to the bids submission deadline. LIC is a member of the CoC and this attempt to finalise a transaction 3 days before the binding bids deadline has upset the other members and bidders, the sources noted. RCL had offered two options to all the bidders.

Under the first option, companies could bid for Reliance Capital Ltd, including its eight subsidiaries or clusters. The second option gave the bidders the freedom to bid for its subsidiaries individually or in a combination. RCL has eight businesses that are on the block. These include general insurance, life insurance, health insurance, securities business and asset reconstruction, among others.