After multiple rounds of bidding and counter bids, Piramal Capital and Housing Finance Ltd has won the race to acquire Dewan Housing Finance Corporation Ltd. The voting by the Committee of Creditors ended today.
The debt resolution proposal submitted by Piramal received 94 per cent of the lenders’ votes, according to banking industry sources. The proposal submitted by Oaktree Capital is understood to have secured around 45 per cent of the votes. The official numbers will be disclosed by the DHFL administrator over the weekend.
“Total recovery comes to about 42 per cent (of the total creditors claim of about ₹81,000 crore). This recovery is very good under IBC process compared to many other accounts. The winning bidder is giving ₹12,700 crore upfront cash. Balance recovery is in the form of non-convertible debentures (NCDs), with a moratorium in the first two years and payable from the third year,” said a banker.
Twists & turns
The resolution process has gone through multiple twists and turns over the last few months. In the first round of bidding, Oaktree had emerged the highest bidder in terms of value, but the Adani group submitted an out-of-turn offer that was higher. This forced the bidders to call for another round of bidding.
As reported by BusinessLine earlier, Piramal had scored higher on the evaluation parameters of the CoC though both Oaktree and Piramal had submitted bids in the range of a little over ₹38,000 crore. However, Piramal’s overall score was 94 while Oaktree’s bid was given 85 points in the evaluation metrics scored by DHFL administrator. Oaktree had then questioned the evaluation metrics and had threatened to take legal recourse if the lenders did not give adequate consideration to its bid. On Friday, Oaktree did not comment on its future course of action as the official results of the voting are yet to be made public.
If Oaktree challenges the outcome, the actual recovery will take time. The bid resolution by Piramal will have to be ratified by the Reserve Bank of India and the National Company Law Tribunal.
This process could take 90 days under normal circumstances. However, there could be further delays if Oaktree challenges the lenders’ decision.
The case may then go to the Supreme Court. This will be another test case under IBC as DHFL is the first finance company to be referred to the NCLT by the Reserve Bank of India.