RCap bond holders likely to recover only half of their investment

RCap said in its statement, ‘The company will fully cooperate with the appointed administrator of RBI for speedy resolution of its debt.

These bonds are not frequently traded in the secondary market. In October, there were around Rs 490 crore of transactions with residual maturity of five years

Bond holders of Reliance Capital (RCap) are likely to recover only half of their investment. Actually, the Reserve Bank of India (RBI) has appointed an administrator, from which the matter is expected to be resolved soon. Large institutional investors, including Life Insurance Corporation of India (LIC) and Employee Provident Fund Organization (EPFO), have RCap bonds worth around Rs 6,000 crore.

Operating subsidiaries likely to fetch good value

According to a report in Economic Times, the administrator will help increase the value of the cash flow generated from the assets of RCap. Half a dozen top industry executives associated with RCap Investments told ET that R.Cap’s investments in operating subsidiaries such as insurance, broking and asset reconstruction are likely to provide good value. The industry executive said, “Different opinion of the lender/investor was creating hurdles in this debt resolution. Now it will proceed in a time bound manner. The total outstanding bonds is estimated to be around ₹15,000 crore.

Debt quantum Rs 16,273.53 crore

The quantum of debt held through these instruments as on September 30, 2019 was Rs 16,273.53 crore. Vistra is the debenture trustee for the ITCL bond. After the order of the Reserve Bank of India given on Monday, it is in discussion with all the stakeholders. These bonds are not frequently traded in the secondary market. In October, there were transactions worth around Rs 490 crore with residual maturity of five years.

RCAP will fully cooperate with the administrator

RCap said in its statement, “The company will fully cooperate with the appointed administrator of RBI for speedy resolution of its debt.” Reliance Capital is the fourth non-banking finance company (NBFC) to be taken to the administrators under the provisions of the Insolvency and Bankruptcy Code (IBC). “This proves that IBC is now a mainstream activity for financial services,” ET report quoted a senior asset manager as saying.

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