DHFL crisis: Bankers likely to recast crisis-hit housing finance company's outstanding loans of over Rs 38,000 cr

In a major relief to the crisis-hit Dewan Housing Finance Corp Ltd (DHFL), bankers to the Mumbai headquartered housing finance company may recast its outstanding loans of over Rs 38,000 crore, said a media report. The loan restructuring plan is being prepared under the Reserve Bank of India’s (RBI) 7 June circular and may include providing an extension to loans’ tenure, conversion of debt into equity, fresh working capital and inducting a new management team and financial investors as interim measures, said a report in Mint. Accordingly, the lenders to DHFL have to complete the restructuring of the cash-strapped company by the end of September to avoid the account being classified as non-performing, the report said quoting a banker in the know of the development. On Sunday, Mint report said that Bank of Baroda (BoB) inked a pact with DHFL to acquire loans worth Rs 3,000 crore against its exposure to the non-bank lender. On Monday, the consortium of 30 lenders led by the state-run Union Bank of India decided to enter into an inter-creditor agreement before 5 July to thrash out a resolution plan for DHFL that has been defaulting on a number of debt repayments, reported PTI. [caption id=“attachment_6023581” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] The lenders also took stock of the month-end and quarter-end cash flow situation of the company whose promoters are talking to investors to pare stake to generate cash, and have set 29 June as the record date for the resolution, three bankers who attended the meeting told PTI. The Wadhawan family, who owns a little over 39 percent in third largest pureplay mortgage lender, has been looking at various ways of coming out of the stress which first came to light late last year following the IL&FS crisis. These include selling stakes in group companies, while they are also reportedly fine with giving up half of their stake in the listed entity of the group. While an alternative investment fund has reportedly evinced interest in its wholesale book, at least two private equity funds are interested in buying into the company, it has been learnt. DHFL, which owes nearly Rs 90,000 crore to banks and other financial institutions, has seen a rash of rating downgrades last month after it defaulted on Rs 1,150 crore to bondholders due on 4 June. This lend to a downgrade of its Rs 850-crore commercial papers to ‘default’ by three rating agencies. On Friday, DHFL had postponed its financial results for the quarter and year ended 31 March 2019, by two weeks. DHFL said the postponement is due to “certain unforeseen operational engagements including non-availability of a few directors to ensure participation of all the members of the audit committee as well as the board for taking into consideration and approval of the financial results for the fourth quarter/financial year ended 31 March 2019”. On 25 June, DHFL said it failed to make Rs 225 crore payment of unsecured commercial paper payment . It will be paid over the next few days, the company said. According to a release filed with the exchanges, “of the Rs 375 crore aggregate amount, Rs 150 crore, that is 40 percent, has been paid on a proportionate basis, and the balance amount of Rs 225 crore shall be paid in next couple of days." Early last month, the promoters of the debt-ridden mortgage lender were in talks with private equity firms and were expecting to garner $1 billion (about Rs 6,900 crore) by selling nearly 50 percent of their holdings . On 11 June, DHFL had said it paid Rs 962 crore towards interest payment on debt instruments which fell due on 4 June and met the seven-day “cure period” to pay off its obligation. — With PTI inputs