DHFL Board Approves Conversion Of Debt Into Equity Shares

The board of directors of Dewan Housing Finance Corporation Ltd. approved the conversion of whole or part of its outstanding debt into shares and securities, besides raising its authorised share capital as part of its resolution plan.

The housing finance company, which faced tough market conditions since September last year when the collapse of IL&FS Group took place, has been in talks with bankers and other lenders for over a month on a resolution plan.

The company first informed investors on Aug. 6, 2019 that it had formulated a draft resolution plan under the Reserve Bank of India’s June 7 stressed assets resolution framework.

“Based on extensive discussions with the lenders on the draft resolution plan, the board considered it necessary to approve certain actions as enabling actions,” the company said in a filing with the Bombay Stock Exchange on Aug. 30.

The board of directors of DHFL have approved of :

• Covering the whole or part of its debt into equity shares or other securities, which may result in a change in ownership.
• Increased authorised share capital of the company from Rs 828 crore to over Rs 1,090 crore including around 57.8 crore worth of equity shares of Rs 10 each being raised to over 84 crore equity shares alongside.
• The share capital of the company also includes 25 lakh non-convertible redeemable cumulative preference shares of Rs 1,000 each, which has remained unchanged.
• The board also seeks to receive additional credit facilities from lenders based on its existing borrowing limits.
• It has approved the disposal of whole or part of the undertakings and assets of the company.

“In view of these developments, the board expanded the terms of reference of the special committee for resolution plan to include the finalisation of the terms of conditions of the various measures and actions contemplated by the resolution plan as stated above, and to sign/execute necessary documents to give effect to the resolution plan,” the exchange filing said.

On Aug. 22, BloombergQuint reported that DHFL’s over Rs 85,000 crore in liabilities are to be split into three portions, as per the resolution plan being formulated.

This would include:

• Extending over Rs 36,000 crore in loans provided by the company to slum rehabilitation projects, large project loans, inter-corporate deposits and some pass-through certificates.
• For projects and mortgages worth up to Rs 14,700 crore, the company has proposed an extended repayment period of eight years at 8.5 percent annual interest.
• Restructuring of term loans from banks, non-retail non-convertible debentures, public deposits and public NCDs.

The annual general meeting of DHFL will be held on Sept. 28.