Tag: Inter-Creditor Agreement

Reliance Home Finance narrows net loss to Rs 284cr in Jul-Sept, BFSI News, ET BFSI

Personal Finance

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New Delhi, Reliance Home Finance on Thursday reported narrowing of its net loss to Rs 284.49 crore for the quarter ending September. The company had reported a net loss of Rs 574.40 crore in quarter ended in September 30, 2020.

Total income during the July-September quarter of 2021-22 was down by 73 per cent to Rs 70.76 crore, as against Rs 259.11 crore in the same period of 2020-21, Reliance Home Finance said in a regulatory filing.

The company’s independent auditor Tambi & Jaipurkar, in its review report said that the company has defaulted on the payment of borrowing obligations amounting to Rs 8,607.16 crore as of September 30, 2021 and its asset cover has also fallen below 100 per cent of outstanding debentures to Rs 5,967 crore.

The company’s ability to meet its obligation is dependent on material uncertain events including restructuring of loan portfolio, implementation of resolution plan by inter creditor agreement for the resolution of its debt under the ICA and revival of housing finance. The financial results of the company have been prepared by the management on a going concern basis.

“Our conclusion is not modified in respect of this matter,” the auditor said.

The company said it has cash on hand of about Rs 2,220 crore in the form of investment in liquid mutual fund and fixed deposits. However, there is delay in debt servicing on the back of a November 2019 order passed by Delhi High Court, which bars the company from disposing off its assets.

“The company is engaged with its lenders for arriving at the debt resolution plan. In this regard, certain lenders of the company have entered into an Inter-Creditor Agreement (ICA)…The ICA lenders have evaluated, voted upon and selected Authum Investment & Infrastructure as the final bidder on June 19, 2021,” it said.

In view of the resolution process being in the final stages, the accounts of the company have been prepared on going concern basis, it added.



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Lenders to Reliance Home Fin bid in favour of Authum’s resolution plan

Banking & Finance

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Over 91 per cent of lenders to Reliance Home Finance have voted in favour of the resolution plan of Authum Investment and infrastructure.

Voting for the resolution of the debt-ridden home finance company had started on May 31 and ended on June 19.

“Our company, on June 19, emerged as the successful highest bidder in relation to acquisition of all assets of Reliance Home Finance under the resolution process in terms of Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019 dated June 7, 2019,” said Authum in a regulatory filing.

Regulatory approvals

In this connection, the Lead Bank on behalf of lenders of RHFL under the Inter-Creditor Agreement (ICA), has issued a letter of intent in favour of the company, it further said, adding that it is subject to regulatory and statutory approvals.

Authum had submitted a bid of ₹2,911 crore, which includes ₹24 crore as deferred interest to financial creditors.

About ₹1,800 crore of cash available with Reliance Home Finance will be distributed to lenders, along with the proceeds from the resolution plan.

“Authum’s plan offered the highest net present value and scored the highest in terms of ease of implementation. It was comprehensive addressing all the stakeholders, including RHF employees and customers,” said the source.

While the formal voting period has ended, the lenders have agreed to accept votes from a few more lenders who are still waiting for internal approvals.

Networth of Authum

Authum Investment and Infrastructure is a registered NBFC involved in investments in shares and securities and has a networth of over ₹1,500 crore as on December 31, 2021.

Reliance Home Finance, a subsidiary of Anil Ambani-controlled Reliance Capital, had a debt of about ₹11,200 crore.

“We believe that the acquisition of RHFL, a reputed lending franchise to affordable housing and housing segments, makes our company a significant player in diversified financial services,” said Authum.

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