To minimise haircut, DHFL lenders want bidders to maximise offers

Our Bureau Mumbai | Updated on October 26, 2020

Say bids are ‘not up to the mark given the portfolio and assets of home finance firm’

Lenders to Dewan Housing Finance Corporation Ltd have decided to ask all four bidders to improve their offer to avoid taking huge haircuts.

While American global asset firm Oaktree Capital is ahead in the race to acquire the stressed assets of DHFL, the Committee of Creditors, which met on Monday, wants more money.

“The bids are not up to the mark given the portfolio and assets of DHFL. Lenders will face a huge haircut but efforts are on to increase the bid amounts,” said a person familiar with the development. The CoC meeting will continue on Tuesday.


More time for resolution

The NCLT has granted DHFL 90 more days for corporate insolvency resolution process on account of the lockdown. The fresh deadline ends on January 5, 2021.

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According to documents reviewed by BusinessLine, Oaktree Capital has offered to pay ₹12,303 crore upfront in cash to settle the admitted financial creditor claims. For non-financial creditors, it will issue ₹15,800 crore of non-convertible debentures with a quarterly coupon of 6.5 per cent and a seven-year tenure . It has offered to pay ₹230 crore to admitted employee claims. The plan includes a capital infusion of ₹1,000 crore within 12 months. The total recovery for the lenders under this plan will be ₹28,103 crore against total outstandingsof over ₹85,000 crore. Lenders are uncomfortable that the highest recovery they can possible get is about 33 per cent of the overall exposure. They want the bid to be revised up to ₹40,000-45,000 crore.

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The second best offer is from Piramal Capital and Housing, which has bid only for the retail portfolio of DHFL. It has offered upfront cash of ₹9,000 crore to financial and operational creditors along with employees and other creditors. Additionally, it has proposed deferred payment to financial creditors by issuing NCDs for ₹6,000 crore. The Adani Group and SC Lowy are the other bidders.

It remains to be seen if the bidders will oblige in the backdrop of the economic downturn and the alleged fraud detected at the company.



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Published on October 26, 2020

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