Reliance Capital to "fully co-operate" with RBI; stock at 5% lower circuit

Shares of Reliance Capital were locked at the 5 per cent lower circuit, at Rs 18.10 apiece, on the BSE on Tuesday after the Reserve Bank of India (RBI) on Monday superseded the board of industrialist Anil Ambani-promoted Reliance Capital, a non-banking financial company (NBFC), owing to defaults and governance issues.

"In view of the defaults by RCL (Reliance Capital Ltd) in meeting the various payment obligations to its creditors and serious governance concerns which the board has not been able to address effectively", the central bank superseded the board.

The RBI has appointed Nageswar Rao Y, former executive director of Bank of Maharashtra, administrator of Reliance Capital. READ ABOUT IT HERE

On its part, the company has informed the exchanges that it will "co-operate fully" with the Administrator appointed by the RBI.

"Reliance Capital Limited welcomes the Reserve Bank of India's (RBI's) move to resolve the Company's debt in accordance with the IBC Code. The Company will co-operate fully with the Administrator appointed by the RBI for the expeditious resolution of its debt in the best interests of all stakeholders," it said in a filing. READ HERE

It added: The complexity of litigation initiated by certain secured and unsecured lenders, resulting in the pendency of over 10 cases in various fora, including the Hon’ble Supreme Court, Mumbai High Court, Delhi High Court and DRT, has effectively stalled the resolution of the Company’s debt, despite its best efforts for the past over 2 years.

The Company has no outstanding loans from banks and approximately 95 per cent of its debt is in the form of debentures, it said.

According to the data compiled by Bloomberg, Reliance Capital had defaulted on Rs 8,3138.8 crore. The company had said in its December-quarter earnings last year that it had listed non-convertible debentures (NCD) of Rs 14,827 crore.

Reliance Capital's bonds run until at least 2028 and have a weighted average maturity of 3.36 years, and a weighted average fixed coupon of 9.37 per cent. The debt of Reliance Capital stands at Rs 27,100 crore. On a standalone basis, the networth was a negative Rs 8,195 crore, and on a consolidated basis a negative Rs 13,700 crore.

Reliance Capital reported a consolidated net loss of Rs 2,162 crore in the first half of the financial year (ended September 30).