Sources close to the development told FE that two rounds of negotiations with Clix have been completed.
Cash-starved Lakshmi Vilas Bank (LVB) said it wants to reach an early conclusion to the merger deal with Clix Group without compromising on its core interest. This comes in the wake of reports that Clix is unhappy with the delay in reaching the deal. LVB had received an indicative non-binding offer from Clix on October 8.
Shakti Sinha, independent director and part of the three-member committee of directors (CoD) approved by the RBI to run the day-to-day operations of LVB, told FE that the two teams are meeting regularly and negotiations are going on.
“It is a complex thing, we want to do it by one by one. Though we want to do it quickly, we want to be fair to the stakeholders of the bank. We want to reach an early conclusion without compromising on the core interest of the bank,” he said, when asked about the delay and the tentative deadline to arrive at a conclusion.
Sources close to the development told FE that two rounds of negotiations with Clix have been completed. The bank said last week that a minor incremental due diligence which was requested by Clix Group had been completed and both the sides were in the process of finding a workable and mutually acceptable framework.
According to Sinha, serious negotiations have been started only less than two weeks ago and it is quite natural that the process would take a bit a longer for a deal of this magnitude. Though he did not spell out the hurdles, sources said the main stumbling block now is about how much equity would Clix bring into bank and what percentage would be the debt part. LVB expects around Rs 1,400 crore into its books through the merger.
Clix also wants LVB to make full provisions against contingent liability of Rs 720 crore related to transactions involving former Religare promoters, citing that the bank will have to return the money if it loses the case against RFL.
Meanwhile, the bank is busy preparing for its Rs 500-crore rights issue for which ICICI Securities has been appointed the merchant banker.
LVB which is in the lookout for an MD and CEO will send two more names to the RBI by end of November.
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