A writ petition has been filed in the Delhi High Court by Mudrakash Investfin, a registered non-banking finance company (NBFC), against Yes Bank in the matter involving its deal to sell stressed assets to investment banker JC Flowers. In the petition, the NBFC has alleged that Yes Bank created tailor-made criteria that suits a particular buyer and did not disclose that JC Flowers, the bidder approved by it, was issuing ‘security receipts’ (SRs) or ‘hope notes’ for 85 percent of its bidding amount.
The petition, has stated that Yes Bank will be left with no money from the recoveries based on the structure of the SRs.
Costly haircut
As part of the deal, Yes Bank is taking an upfront 76 percent haircut on its stressed assets book worth ₹48,000 crore. JC Flowers has agreed for a consideration of ₹11,183 crore out of which it will be paying Yes Bank only 15 percent or around ₹1,677 crore upfront. The remaining 85% or ₹9,500 crore has been converted into SRs. But to get ₹1,677 crore amount upfront, Yes Bank has agreed to invest ₹375 crore into an asset reconstruction company of JC Flowers for a 20 percent stake.
On December 1, businessline had reported that private equity fund Cerberus Capital had offered ₹8,300 crore upfront all-cash deal to Yes Bank, which has not been considered by it. The petitioner has now racked up this offer of Cerberus in its petition for its arguments. The petition states that there was a lack of probity by Yes Bank and the criteria to identify JC Flowers and relation between its ARC was not known.
Published on December 8, 2022
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