Creditors meet on December 18 to respond to calls for tenders received for DHFL
The Creditors Committee (CoC) of Dewan Housing Finance Corporation Ltd (DHFL) will meet on Friday to assess and respond to the tenders received for the housing finance company, which is currently the subject of a resolution process. ‘corporate insolvency (CIRP).
Oaktree Capital and Piramal Capital & Housing Finance Ltd (PCHFL), the wholly-owned subsidiary of Piramal Enterprises Ltd, are seen as the two main contenders for the struggling DHFL.
Given the competitiveness of Oaktree’s and PCHFL’s bids, the CoC may take a long and careful look at the Net Present Value (NPV) of the bids, which may favor the bidder paying a higher initial amount.
Oaktree’s revised bid is estimated at 36,700 crore, slightly higher than Piramal’s 35,500 crore bid.
However, Piramal offered the highest initial amount at around 12,700 crore compared to Oaktree’s bid of around 11,600 crore.
Sources point out that there are concerns about the repayment schedule of the non-convertible debentures.
The banks are believed to be keen to finalize the restructuring of DHFL by January to ensure they can get the dues in that fiscal year.
For PCHFL, the purchase of DHFL will allow it to meet the criteria relating to the minimum percentage of total assets for housing finance and the minimum percentage of total assets for housing finance for individuals within the regulatory framework of the Reserve Bank of India for HFCs and retain the HFC label.
In accordance with PCHFL’s plan, the company will be merged in reverse with DHFL.
“The race for DHFL resolution is now a two-horse race between Oaktree and Piramal. As lenders take a cut in the resolution process, they are likely to favorably consider a higher initial cash component by the end of the fourth quarter in order to increase their bottom line, ”said Sushmita Gandhi, partner, IndusLaw.
She noted, however, that this was entirely within the commercial wisdom of the CoC and NCLT, and that NCLAT has repeatedly stated that it cannot override the CoC’s decision to approve the resolution plan.