DHFL board approves plan to convert debt into equity, sell assets to raise more capital

DHFL, India’s fourth-biggest housing finance company, has roughly 1 trillion rupees ($14.15 billion) of debt

Press Trust of India August 30, 2019 19:22:04 IST
DHFL board approves plan to convert debt into equity, sell assets to raise more capital
  • The conversion of debt into equity may result in a change in ownership, the company said in a regulatory filing

  • DHFL, India’s fourth-biggest housing finance company, has roughly Rs 1 lakh crore ($14.15 billion) of debt

  • DHFL owes about Rs 40,000 crore to banks alone

Bengaluru: Crisis-hit shadow bank Dewan Housing Finance Corp (DHFL) said on Friday its board had approved a plan that included converting debt into equity, even as it seeks to sell assets and raise more capital.

The conversion of debt into equity may result in a change in ownership, the company said in a regulatory filing, adding that the plan still needed shareholder approval.

DHFL, India’s fourth-biggest housing finance company, has roughly Rs 1 lakh core ($14.15 billion) of debt, and owes about Rs 40,000 crore to banks alone. The company hasn’t been able to service its debt and it has defaulted on its obligations several times.

DHFL board approves plan to convert debt into equity sell assets to raise more capital

Representational image. Reuters.

As a result, the non-banking financial company is undergoing a restructuring process that is being deliberated upon by its lenders, to help it ride out a liquidity crunch and restart its lending business.

DHFL and other shadow banking firms have been stung by a liquidity crunch following last year’s collapse of Infrastructure Leasing and Financial Services Ltd - once one of the biggest players in the sector.

DHFL’s struggles also come as the domestic banking sector still grapples with nearly $150 billion of stressed assets.

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