The Hinduja Group has revised its funding options for acquiring Reliance Capital as RBI has raised objection to the proposal of providing cross guarantee as per the application submitted by IndusInd International Holding (IIHL).

The group has already reworked ₹7,300 crore funding through an alternative route and the revised the lending documentation is expected to be filed in few weeks, said IIHL in a application filed with the National Company Law Board on Wednesday.

NCLT is expected to take up the case for hearing on Thursday.

IIHL did not respond to queries sent by businessline.

After almost all the key terms were extensively discussed and agreed upon between IIHL and its lenders, the application said the administrator through an email on May 22 to IIHL said that RBI was not approving cross guarantee as per the application submitted by IIHL. This was an extremely critical part of the structure for lenders to the transaction, it said.

Security package

After extensive discussions with the lenders, an alternate security package was worked out to include a put option on the overseas holding company to provide a security for the lenders.

A confirmation on the alternative security structure, a revised term sheet as per the implementation structure have been finalised and confirmation emails have been received from both the lenders – Barclays Bank and 360 One on June 6, said the petition filed by IIHL.

The lenders are reworking the lending documentation in parallel together with their consultants and lawyers in accordance with the term sheets and are expected to complete this in the next few weeks, it said.

The total consideration payable under the approved resolution plan was ₹9,861 crore. Of this, ₹7,300 was to funded through debt, ₹2,500 crore through equity infusion by the applicant from outside India and another equity infusion of ₹250 crore by Cyqure India.

Also read: RBI imposes ₹74 crore fine on 64 lenders amid heightened supervision in FY24

As regards the equity infusion of ₹2,750 crore, the applicant and Cyqure has already submitted a certificate from its statutory auditors D & G Associates LLP, Chartered Certified Accountants and statutory auditors on the applicant’s ability to meet its obligation on demand.

The certificate clearly states that $300 million (about ₹2,500 crore) have been earmarked for equity participation.

So far as the Indian entity infusion of ₹250 crore is concerned, its shareholders AP Hinduja, his wife and their son credentials and solvency is not something which can be disputed, said the application. Moreover, AP Hinduja has confirmed his commitment to the transaction.

“It is, therefore, incorrect to state that there has been any delay on account of the applicant when all the actions for obtaining approvals are to be undertaken with the joint effort of the administrator, the subsidiaries and associate companies of the corporate debtor,” said the application.

Related Topics