Money & Banking

Creditors meet on Dec 18 to take a call on bids received for DHFL

Surabhi/K Ram Kumar Mumbai | Updated on December 17, 2020

Oaktree Capital and Piramal Capital are main contenders, but CoC may favour the bidder paying higher upfront cash

The Committee of Creditors (CoC) of Dewan Housing Finance Corporation Ltd (DHFL) will meet on Friday to evaluate and take a call on the bids received for the housing finance company, which is currently undergoing corporate insolvency resolution process (CIRP).

Oaktree Capital and Piramal Capital & Housing Finance Ltd (PCHFL), the wholly-owned subsidiary of Piramal Enterprises Ltd, are seen as the two main contenders for the troubled DHFL.

Given the competitiveness of the bids of Oaktree and PCHFL, the CoC may take a long, hard look at the net present value (NPV) of the bids, possibly favouring the bidder paying higher upfront cash.

Revised bid

Oaktree’s revised bid is estimated at ₹36,700 crore, just marginally higher than Piramal’s bid of ₹35,500 crore.

However, Piramal has offered the highest cash upfront at about ₹12,700 crore compared to Oaktree’s offer of about ₹11,600 crore.

Sources point out that there are concerns about the repayment schedule of non-convertible debentures.

Banks are believed to be keen on finalising the restructuring of DHFL by January to ensure that they can get the dues within this fiscal year.

For PCHFL, buying DHFL will enable it to meet the criteria relating to minimum percentage of total assets towards housing finance and minimum percentage of total assets towards housing finance for individuals under the Reserve Bank of India’s regulatory framework for HFCs and retain the HFC tag.

As per PCHFL’s plan, the company will be reverse merged with DHFL.

“The race for DHFL’s resolution is now a two-horse race between Oaktree and Piramal. While the lenders are taking a haircut in the resolution process, they are likely to consider higher upfront cash component favourably in the run up to the close of the fourth quarter in order to boost their bottomline,” said Sushmita Gandhi, Partner, IndusLaw.

She, however, noted that this is entirely up to the commercial wisdom of CoC and NCLT, and NCLAT has time and again held that it cannot substitute the decision of CoC pertaining to approval of the resolution plan.

Published on December 17, 2020

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