Wadhawan Proposes To Offer DHFL Equity To Retail Depositors, Bondholders
Kapil Wadhawan, the promoter of Dewan Housing Finance Corporation Ltd., has sent a fresh letter to the Reserve Bank-appointed administrator, seeking to participate in the resolution process.
Wadhawan proposed to offer DHFL equity to all creditors, including retail depositors and holders of non-convertible debentures, through conversion of debt to equity, according to the letter sent on Wednesday. BloombergQuint has reviewed a copy.
“I am also willing for all the creditors, including NCD and fixed deposit holders to convert part of their debt into equity so as to enjoy the equity upside they will get once the company is revived and revitalized and the company commences business as norms,” Wadhawan said.
BloombergQuint had previously reported that the resolution process under the bankruptcy law does not provide special privileges to retail depositors and NCD holders as they are classified as unsecured creditors. This would mean that they would get a proportionally lower payout, once the case is resolved.
According to the promoter, he currently does not have access to the housing finance company’s financial records and, thereby, is unable to ascertain its present position. Therefore, Wadhawan said, he is seeking to participate in the upcoming meeting of the committee of creditors to be able to put forth some of these thoughts to the creditors.
“If I am provided access to the records and documents of the company, I will be in a position to make a proper assessment basis the latest numbers and make a proposal setting out the necessary upfront and deferred payment components which will provide maximum value realisation for all stakeholders,” he said in the letter.
BloombergQuint awaits a response to queries emailed to R Subramaniakumar, the RBI-appointed administrator.
Last month, Wadhawan had proposed to pay up to Rs 43,000 crore to the lenders of the company to take over control. However, the legal adviser to DHFL’s administrator rejected this offer, claiming that it seeks to monetise properties where lenders already have legal rights.
In his latest letter, Wadhawan said as per a resolution plan the promoters had submitted in September 2019, all the creditors involved with DHFL would be repaid in full. This plan, he said, had received the approval of the lenders and the National Housing Bank.
The plan, however, was rejected by the RBI, after which in November 2019, the regulator suspended DHFL’s board, appointed an administrator to run daily affairs and directed banks to resolve the stress under the Insolvency and Bankruptcy Code.
Wadhawan claimed that the four bidders who have submitted offers for DHFL’s loan portfolio are not reflective of the value of the housing finance company and will result in large haircuts for the lenders. So far, Oaktree Capital Management, Piramal Group, Adani Group and SC Lowy have submitted their offers for DHFL’s loan assets.
After submitting their initial bids last month, the bidders have now revised their offers upward as part of the negotiations held with creditors.
“The fact that the bidders have increased their bids substantially proves my point that the bids are being downplayed and the maximum realizable value is not being bid for," Wadhawan said. "This is contrary to public interest."
The housing finance company’s promoter is in custody on money laundering charges. He is also facing litigation by 63 Moons Technologies Ltd., which had invested in DHFL’s debentures. Wadhawan is seeking that the creditors jointly defend against the case with him and that claims made by 63 Moons be entertained under the insolvency code.