Religare Finvest Ltd’s resolution plan, whereby lenders plan to recast the total borrowings of ₹5,850 crore by extending the tenure of the term loan, providing cash credit facility, and conversion of debt into non-convertible debentures (NCDs) may have attracted TCG Advisory Services Pvt Ltd to make a bid to buy the company.
On July 10, Religare Enterprises Ltd (REL) informed the exchanges that it has entered into a binding term-sheet with TCG Advisory Services Pvt Ltd, Religare Finvest Ltd (RFL) and Religare Housing Development Finance Corporation Ltd (RHDFCL), whereby it will divest its entire stake in RFL to TCG Advisory Services Pvt Ltd.
Resolution plan
According to sources, of the total residual debt of ₹2,693 crore, the term loan of ₹2,165 crore may be extended for eight years, including a three-year moratorium, and the cash credit of ₹528 crore would be revolving.
Of the existing secured debt of ₹5,280 crore, the sustainable portion is ₹2,693 crore (this is the debt that can be serviced based on RFL’s standard book, after factoring for portfolio at risk).
The balance debt of ₹3,157 crore (secured debt of ₹2,587 crore and unsecured debt of ₹570 crore) cannot be sustained by RFL’s existing standard book and has to be serviced through realisation of non-strategic investments, portfolio-at-risk and written-off assets.
Other facilities likely to be under the proposal include: 1. Conversion of ₹300 crore worth of debt into cumulatively convertible preference shares (CCPS) of 10 years, with a three-year lock-in. 2. Convert debt of ₹1,888 crore into two Non-Convertible Debenture (NCD) tranches — one, of ₹897 crore (of 10 years duration and paying no interest) and the other of ₹991 crore (with bullet repayments at the end of 5th and 10th years and paying no interest). 3. Unsecured debt of ₹570 crore to be also treated similarly.
Recoveries
On recoveries from other assets, the plan envisages that of the outstandings of ₹1,500 crore, ₹897 crore would be recovered by September 2019 (through sale to asset reconstruction companies); and against the portfolio-at-risk in the standard portfolio of ₹300 crore, the expected recovery will be ₹240 crore in the 2022-29 period.
Recoveries from non-strategic assets during the 2022-29 period include overall recovery of ₹1,701 crore (the expected amount has been pegged at ₹1,565 crore), including recovery from non-core investments (₹265 crore) and fixed deposits with Lakshmi Vilas Bank (₹792 crore).