DHFL to submit resolution plan to lenders next week

Our Bureau Mumbai | Updated on July 11, 2019 Published on July 11, 2019

File photo   -  REUTERS

Banks willing to give working capital, but want to know how the embattled company will bring in more funding

Cash-strapped Dewan Housing Finance Corporation (DHFL) will be submitting a resolution plan (RP) to its lenders early next week.

The RP will be discussed by lenders and the same would thereafter be adopted with modifications/ changes as they deem fit, said sources clued in to the developments.

At a meeting on Thursday attended by lenders and non-convertible debenture (NCD) holders, bankers are understood to have agreed to go ahead with the modalities of signing the inter-creditor agreement (ICA). They also want to take the NCD holders into confidence when framing the RP. This is aimed at ensuring that all stakeholders realise their dues to the maximum extent possible.

An ICA provides the ground rules for finalisation and implementation of a resolution plan (RP) in respect of borrowers with credit facilities from more than one lender.

Under the RP, DHFL’s liabilities could be realigned, debt could get converted into equity, promoters may be required to dilute their shareholding in favour of new investor(s), etc.

Sources said another meeting is likely next week or in 10 days as Thursday’s meeting was a preliminary one. Lenders are willing to give working capital, but want to know how DHFL will bring in more capital or funding. Issues such as taking over promoter shares or stake-sale by DHFL were also discussed and continue to be on the table.

The total exposure of the banking sector to DHFL is estimated at about ₹46,000 crore, including about ₹32,000 crore direct (loan) exposure and about ₹14,000 crore by way of investments in debt instruments issued by the company.

Published on July 11, 2019
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