Reliance Infrastructure Telecommunications Ltd (RITL) lenders have settled with the successful bidder, Reliance Projects & Property Management Services, for the bankrupt company after the takeover deal was completed, The Economic Times reported on Thursday.
Two years after the agreement was approved by the National Company Law Tribunal (NCLT), the banks, led by the State Bank of India (SBI), agreed to issue a No Objection Certificate (NOC) to Reliance Industries (RIL), owned by Mukesh Ambani. ), whose subsidiary is Reliance Projects & Property Management Services, the successful bidder for the RITL takeover, the ET report said.
After the NOC, the company promoted by RIL will transfer the agreed amount to an escrow account. The NOC, a certificate of non-contribution, is required before the implementation of a resolution plan.
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“Both parties have agreed to move forward, which means there is progress in completing this resolution which has been pending for almost two years now. Banks have already started issuing bonds. NOC which will be collected and handed over to the resolution professional, after which RIL will transfer the amount to the escrow account,” a person familiar with the transaction told the Daily.
RITL owes a total of Rs 13,483 crore in direct exposure to lenders on the assessments of Rs 41,055 crore allowed by the NCLT. Nearly 30 lenders have direct or indirect exposure to RITL and its parent company Reliance Communications (RCom), which is controlled by Anil Ambani.
The resolution plan approved by the NCLT, in December 2020, envisages a total recovery of Rs 3,720 crore from the company, including an upfront payment of Rs 3,720 crore from the RIL. The plan also includes a future payment of Rs 800 crore upon realization of preferred shares held in Reliance Realty (RRL) to financial creditors and a payment of Rs 250 crore for resolution costs.
Total recovery is at a 65% discount to lenders.
“It is expected that the banks will give their NOCs by the end of the month and the money should be in the escrow account no later than early next month. RIL has assured lenders that it will honor its commitment to release the amount as soon as the NOCs are there,” a second person familiar with the development told ET.
It should be noted that the banks will not receive payment immediately as the National Company Law Appellate Tribunal (NCLAT) has suspended distribution of the product until further notice. This was after Qatar’s Doha Bank, which also has direct fund-based exposure to the company, challenged the NCLT’s resolution plan with the NCLAT.
The NCLAT will hear the case on August 26.