Banks in talks with SP Group to resolve RHFL impasse

Indian lenders have initiated talks with Shapoorji Pallonji (SP) Group after the latter’s objection to the debt restructuring plan of Reliance Home Finance (RHFL). Lenders are expecting a breakthrough before March-end, which will see a debt resolution of ~11,000 crore owed by the Anil Ambani-led home finance company.

Indian lenders have initiated talks with Shapoorji Pallonji (SP) Group — owned by billionaire Mistry family — after the latter’s objection to the debt restructuring plan of Reliance Home Finance (RHFL). Lenders are expecting a breakthrough before March-end, which will see a debt resolution of ~11,000 crore owed by the Anil Ambani (pictured)-led home finance company (HFC).

SP Group, which has also sought restructuring of its own debt of ~30,000 crore, had moved courts, thus stalling the debt resolution process of RHFL. The HFC owes ~200 crore to SP Group and had defaulted on the loan last year.

When contacted, an SP Group source said the dues from RHFL are to a joint venture company and not Shapoorji Pallonji. Hence, its exposure to RHFL is not part of its one-time restructuring (OTR) process. The issue is part of a court process and sub judice, added the source.

The executive said SP Group is in the process of finalising its own OTR scheme and is not at liberty to share any information at this point in time.

But SP Group’s litigation has stalled the RHFL debt resolution, which has received four binding bids. While two of the bids from ACRE and Authum Investment & Infrastructure are for all the assets of the company, the other two from Capri Global and Avenue Capital-asset Reconstruction Company (India) consortium are for only the retail assets.

The bids are considered to be attractive to lenders since their values have crossed the fair value as determined by the two independent valuers appointed by the lenders. However, the lenders’ plan has hit a roadblock after a stay obtained by SP Group from the Delhi High Court against RHFL in November 2019.

According to the stay, RHFL is prohibited from disposing, alienating, encumbering either directly or indirectly or otherwise part with the possession of any its assets, thus directly impacting the ongoing debt resolution.

A senior banker involved said it is imperative for RHFL’S lenders to settle the issue with SP Group for successful closure of the ongoing resolution plan.

“We hope to finalise the successful bidder for RHFL’S assets in the next few weeks. Thus, it becomes more important now to resolve this impediment at the earliest,” the executive said. SP Group is a secured lender with ~200 crore exposure of a total debt of ~11,200 crore (i.e., less than 1.8 per cent of the total debt of RHFL).

In August last year, lenders, led by Bank

of Baroda, had invited expressions of interest for the assets of RHFL and Reliance Commercial Finance — both arms of Reliance Capital.

The resolution process is being managed by BOB Capital Markets and Ernst & Young.