Money & Banking

DHFL assures lenders of zero haircut on the principal under resolution plan

Our Bureau Mumbai | Updated on August 06, 2019 Published on August 06, 2019

Company in talks for new auditor; no clarity on Q1 results

The troubled Dewan Housing Finance Corporation Ltd (DHFL) on Tuesday assured that its lenders will not have to face any haircuts under the resolution plan.

As part of the resolution plan, which was cleared by the Special Committee of the DHFL Board on Tuesday, DHFL will put a moratorium of repayments and will also seek funding from banks and the National Housing Board for re-starting retail lending.

DHFL, in a regulatory filing, said that the plan will also take steps to address the asset-liability mismatch.

According to sources, the company is seeking a moratorium for at least sixmonths and working capital loans of ₹1,200-1,500 crore per month to start retail funding. DHFL will also bring in a strategic investor.

“We wish to inform you that the Special Committee for Resolution Plan, at its meeting held on Tuesday... inter-alia, took on record the draft resolution plan formulated by the company in consultation with the committee and its financial advisors — Ernst & Young; and also approved the submission of the said resolution plan to the lenders of the company,” it said in a regulatory filing. At least 60 per cent of the lenders will have to approve the plan.

DHFL, which has been troubled with problems of asset liability mismatch since last August, has been trying to work out a resolution plan with its lenders. Banks that have lent to DHFL have already signed an inter-creditor agreement and are also trying to work with bond holders including mutual funds and insurance companies on the resolution plan.

As of December 31, 2018, DHFL had an outstanding debt of over ₹1 lakh crore, of which 38 per cent was from banks and 47 per cent was through debt borrowing.

About 30-odd banks have a collective exposure of ₹40,000 crore to DHFL (term loans: ₹24,000 crore and NCD investments: ₹16,000 crore).

Deloitte resigns

Meanwhile, in a separate filing, DHFL said that Deloitte has resigned as its joint statutory auditor.

“The reasons cited by Deloitte Haskins & Sells LLP are that in view of the matters stated in the disclaimer of opinion in the financial statements of the company for the year ended on March 31, 2019, issued by them and its consequential effect on reporting under the Companies Act, 2013, the firm’s policy on client acceptance and continuation does not permit them to continue as statutory auditors of the Company,” DHFL said, adding that it is in talks with audit firms to appoint a new auditor.

There is no clarity on when the company will announce its first-quarter results. According to sources, it is yet to finalise the results and it will have to be pushed back until an auditor is found.

Following the news of the resolution plan, DHFL scrip gained 32.06 per cent and closed at Rs 55.40 apiece on BSE.

Published on August 06, 2019
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