SBI Caps appointed as advisor for Reliance Power subsidiary's debt resolution

MUMBAI: Lenders of Vidarbha Industries Power Ltd (VIPL), a subsidiary of Reliance Power, have appointed SBI Caps as an advisor for its debt resolution process. As per the terms of reference, SBI Caps will invite bids for the sale or one time settlement (OTS) of VIPL debt. It will also lay down an evaluation criteria and recommendations for the anchor bidder. SBI Caps will follow a fair and transparent process to ensure the resolution of VIPL's over Rs 2000 crore outstanding debt, said a source close to the development.

The responsibility of conducting the Swiss Challenge process to maximise the recovery for lenders will also lie with the SBI Caps, Sources revealed. The deadline to complete the resolution process by SBI Caps is September 30.

The terms of reference says the SBI Caps, while executing the process, will ensure compliance with the RBI guidelines of June 8, 2023 for the sale of VIPL debt and one time settlement. The appointment of SBI Caps comes at a time when VIPL lenders have received three suo moto bids for the sale and OTS of VIPL debt. Reliance Power, the promoter of VIPL, has made a one time settlement offer to the lenders of VIPL.

Reliance Power's all cash offer of Rs 1,260 crore is supported by the Varde Partners of Singapore. Ahmedabad-based CFM Asset Reconstruction and NARCL are the other two bidders in the fray.

CFM ARC's Rs 1,220 crore all cash offer is lower than the RPower's offer of Rs 1,260 crore. Notably, CFM ARC is among the four Asset Reconstruction Companies who have been issued show cause notices by the RBI post its special audit, following the Income Tax raids on the companies. The third bidder, NARCL's offer of Rs 1,120 crore is significantly lower than RPower's OTS offer, as it is offering only 15 per cent in cash, while the rest will be paid over five years. The Net Present Value (NPV) of NARCL offer is only Rs 850 crore.