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Oaktree Capital is weighing legal action against the lenders of Dewan Housing Finance Corporation Ltd (DHFL) over the resolution process amid initial indications that Piramal’s bid is finding favour with the Committee of Creditors (CoC).
“There have been significant concerns that pre-determinations have been made in relation to the bids being presented by different bidders. The bids are being misrepresented and undue preference is being given to discredit Oaktree’s bid and select the second highest bid,” said a source close to the American fund.
While DHFL’s creditors are yet to announce the winning bid — the voting process ends on January 10 — Oaktree has not received a satisfactory response to multiple emails explaining its offer, said the source. “An email sent on December 22 seeking clarifications did not get the desired response and another email sent on December 24, offering to take off the ₹1,500 crore in escrow and up the bid by ₹1,700 crore, was not considered.”
The crux of the issue is that while Oaktree’s bid appears to be the highest in terms of value, the CoC may vote in favour of Piramal because its bid seems to be better qualitatively.
Oaktree’s bid for DHFL provides for a total recovery of ₹38,400 crore. Piramal’s plan, on the other hand, merges DHFL with an AA rated entity, offers over ₹10,000 crore of equity immediately, and provides clarity on quality and secondary market valuation of NCDs.
Email queries sent by BusinessLine on the issue to DHFL Administrator R Subramaniakumar did not elicit a response.
Concerns on transparency
Oaktree had recently written to the CoC, expressing concerns about the transparency of the resolution process. It had also provided details of its bid, underlining that its evaluation on incorrect information could be subject to judicial, administrative and investigative review.
‘Misplaced concerns’
A Piramal spokesperson said concerns on any undue favour are misplaced. “The CoC comprises some of the largest and most reputed financial institutions, including SBI, LIC, Union Bank, RBI and NHB. Each has been a part of India's nation-building efforts over several decades.
“To allege inappropriate behaviour by these institutions is an insult to our country's financial system. We have full faith that the CoC will take into account all legally valid bids submitted before the due date. To suggest anything to the contrary is mischievous, misleading and malicious.”
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