Moving ahead with the resolution plan, the board of Dewan Housing Finance Corporation (DHFL) will meet on August 30 to consider a proposal to issue equity shares.

“We wish to inform that a meeting of the board of directors of the company is scheduled to be held on August 30 to consider and approve the proposal for issuance of equity shares and/or other securities of the company, including by way of preferential issue, pursuant to a conversion of debt to equity under the proposed resolution plan,” DHFL said in a regulatory filing on Tuesday.

Alternatively, the board could also consider other modes for issuing equity shares or a combination through issue of prospectus and placement document or letter of offer or any other permissible, requisite offer document, and alteration of terms of existing securities of the company, if required, it further said.

As part of the resolution plan being worked out, lenders to cash-strapped DHFL are likely to convert debt to equity and take 51 per cent equity stake in the company, until they find a strategic investor.

DHFL, the country’s fourth-largest housing finance company, has outstanding debt of over ₹85,000 crore, of which, nearly ₹40,000 crore is the exposure of banks, while the rest is from mutual funds and insurance companies.

Rajkiran Rai, MD and CEO, Union Bank of India, said last week that converting debt to equity is one of the ideas on the table, and if banks take equity stake in DHFL, it would be for the short term until they get a strategic investor in place. Union Bank leads the consortium of 33 lenders to DHFL working on the resolution plan.

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