DHFL’s Lenders Begin Working On A Restructuring Plan
DHFL lenders have started working on a resolution plan, which could involve converting debt into equity.
Lenders to Dewan Housing Finance Corporation Ltd. have started work on a restructuring plan for the housing financier, which has defaulted on some of its debt obligations, three people in the know confirmed.
The restructuring plan, which is being prepared under the Reserve Bank of India's new stressed asset guidelines, could include conversion of debt into equity, the people quoted above said. Other options being considered include taking over DHFL's loans to slum rehabilitation projects, which the company has found difficult to exit. The plan could also be a mix of these options, the people quoted above said.
A final call in the matter will be taken by the lending consortium after they have signed an inter-creditor agreement, the people quoted above said. The housing finance company has appointed consultants to work with lenders on the restructuring plan.
An email sent to DHFL was not immediately answered. A senior company official, speaking on condition of anonymity, denied discussions with lenders.
DHFL had outstanding dues of about Rs 1 lakh crore as of December 2018, with 38 percent of this raised from banks and 47 percent from debt capital markets. The company says it has paid back over Rs 40,000 crore in dues since September. DHFL is yet to report its financial for the January-March 2019 quarter and has delayed a scheduled board meeting to July 13, according to a stock exchange notification.
State Bank of India (SBI) and Bank of Baroda (BoB) have the highest loan exposure to the company.
Lenders have decided to initiate resolution after a recent delay in repayments on non-convertible debentures by DHFL. On June 4, the company had only made part payments on certain NCDs but managed to make good on its dues within a seven-day cure period. However, the company once again defaulted on June 25.
Earlier, on May 11, DHFL halted any premature withdrawals of fixed deposits and stopped taking fresh deposits in order to manage its liquidity position better.