DHFL to seek ₹1,500-crore loans a month

The resolution plan includes debt restructuring, to pave the way for a new investor to pick up stake. Reuters

The resolution plan includes debt restructuring, to pave the way for a new investor to pick up stake. Reuters

Cash-strapped mortgage lender Dewan Housing Finance Corporation Ltd. (DHFL), which was asked by banks to prepare a resolution plan, will be seeking ₹1,200 crore to ₹1,500 crore in loans per month to kick-start its lending business.

Banks have stopped lending to several housing finance companies, including DHFL, following the debt default by IL&FS in September.

According to highly places sources in DHFL, the resolution plan envisaged restructuring of the debt first, which will pave the way for a new investor to pick up equity stake. The total debt of DHFL is about ₹80,000 crore, of which bank loans constitute ₹40,000 crore. The remaining ₹40,000 crore are in terms of money market instruments, mostly non-convertible debentures.

“The resolution plan seeks short-term loans by banks, with a maturity of one year, every month, for about one year. This will be required to kick-start lending. Home loans, which are extended with these bank loans, will be securitised with the banks again after one year,” the source said.

While banks are trying to execute a comprehensive resolution plan by including all the creditors, including the mutual funds which also subscribed to the NCDs of DHFL, some of the fund houses are not agreeing to be a part of the debt recast process. “Banks are in discussion with some of the mutual funds who are not agreeing. In any case, these funds have a small exposure of about ₹2,500 crore,” the source said. Of the ₹40,000 crore NCDs and other money market instruments, banks alone have an exposure of over ₹12,000 crore.

Nod by month-end

The company expects banks to approve the resolution plan by the month-end.

At ₹80,000 crore, this will be the biggest debt restructuring exercise carried out by banks in the country. DHFL had assured that this would be a comprehensive resolution plan, without any haircut to the lenders.

Banks have already signed the inter-creditor agreement and will scrutinise the resolution plan, and aim to make it operational before September 25. After the debt recast, which is essentially elongating the repayment schedule to match liabilities with assets, a new investor is expected to come in.

DHFL is in talks with Cerberus Capital, Aion Capital and Loan Star for the stake sale. Promoters of DHFL who have 39.8% stake in the company, could see their shareholding reduced by half after the deal. DHFL aims to raise about ₹5,500 crore from the stake sale.

On Tuesday, DHFL stock rebounded to close 4.33% higher at ₹50.60.

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Printable version | Aug 14, 2022 11:37:04 pm |