DHFL Floats Draft Resolution Plan, Proposes Conversion Of Debt Into Equity

Debt ridden mortgage lender Dewan Housing Finance Corporation Ltd. floated a draft resolution plan under which it proposes to convert debt into equity, subject to approval of investors and bankers.

The Wadhawan family, who owns a little over 39 percent in the company, has been looking at various ways of coming out of the stress which first came to light late last year following the defaults by Infrastructure Leasing & Financial Services Ltd.

These include selling stakes in group entities, including in the flagship to the extent of giving up half of their stake.

The company held a meeting on Sept. 27 to present the draft resolution plan to all its institutional creditors including banks, financial institutions, mutual funds, insurance companies and other institutional bond holders, and to apprise them of the various steps required to be undertaken to implement the resolution plan, DHFL said in a filing to stock exchanges on Saturday.

It was assuming a price of Rs 54 per share for debt conversion into equity by lenders to acquire 51 percent in the company, DHFL said.

This proposed resolution plan, including all projections, cash flows, computation of liabilities, etc. are based on reports received from various consultants appointed by the lenders and the company, it said.

The cash flow projections factored for the proposed resolution plan do not take into account any tax impact that may occur, in the hands of the borrowers, DHFL said.

The repayment or restructuring of terms of public deposits is under discussion with relevant stakeholders and regulators and may be subject to amendment, it added.