DHFL bond holders to ink creditor pact


MUMBAI: Debenture holders of Dewan Housing Finance Corp. Ltd (DHFL) agreed to sign an inter-creditor agreement (ICA) after chairman Kapil Wadhawan sought their backing for the plan on Thursday, said people with knowledge of the matter.

Most of the indebted mortgage company’s banks have already joined the ICA.

Following a month-long review period that’s due to end on July 25, DHFL’s lenders and bondholders will have 180 days to agree on a resolution plan under the Reserve Bank of India’s revised stressed assets framework. Out of 27 banks, 22 have signed the ICA. DHFL faces repayment obligations of about Rs 5,000-7,000 crore in the next two months.

Secured debenture holders have a Rs 40,000 crore exposure to DHFL while that of banks is Rs 27,000 crore. “Wadhawan requested all creditors to join the ICA so that they can keep the company as a going concern,” said an investor who was at the meeting. “SBI Caps explained the benefits of signing the agreement. The debenture trustee was part of the meeting.”

DHFL has been selling down assets to meet payment obligations. It has assets worth about Rs 80,000 crore left on its books. In the last six-nine months, DHFL has sold down Rs 36,000 crore of retail loans. The retail book has now shrunk to Rs 35,000 crore and while wholesale debt is Rs 45,000 crore.

SBI Caps, which is helping with the resolution plan, arranged the Thursday meeting. Under the resolution plan, DHFL will be appointing credit rating companies for the grading of sustainable debt. This should have a rating of RP4 at least, said a source. That reflects a moderate degree of safety regarding timely servicing of financial obligations, according to Crisil. DHFL told investors on Thursday that the resolution plan had to be collaborative for maximisation of value for all stakeholders, said another person who attended the meeting.

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Lenders appreciated the company’s commitment to meet obligations without undertaking fresh borrowings in the past nine months. Between September 24 and May 10, the company has made over Rs 30,000 crore in principal and interest payments to creditors, including fixed deposit holders.

DHFL has been looking to rope in a strong strategic investor to ease concerns after allegations of wrongdoing in its loan segment surfaced. As part of the deal, Kapil Wadhawan has agreed to step down from active management once such an investor enters.

ET reported last month that private equity firm AION Capital — a joint venture between Apollo Global Management and ICICI Venture — was poised to become the single largest shareholder in the troubled mortgage lender. Lone Star was also said to be in the race.

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