Cash-strapped Dewan Housing Finance Limited today said its creditors would not have to take any haircut on their principal exposure as per the draft resolution plan that has now been approved by the mortgage lender.
In a regulatory filing this morning, DHFL said the Special Committee for Resolution Plan today took on record the draft resolution plan formulated by the company in consultation with the committee and its financial advisors, Ernst & Young. The special committee, which was formed by DHFL to work on the revival plan, has approved the submission of this draft plan to the lenders, who are then expected to deliberate on the proposal before the resolution plan is finalised.
According to DHFL, this draft resolution plan has four salient features. One, that there will be no principal haircuts to any creditors. Two, the plan proposes steps towards addressing aligning asset-liability mismatch problem. Three, it also envisages a moratorium on repayments to various creditors, and lastly, it will seek funding from the banks/National Housing Bank (NHB) for starting its retail funding activity.
CNBC-TV18 had reported on the draft contours of the resolution plan earlier. Sources close to DHFL had indicated to CNBC-TV18 that the mortgage lender will propose September 25 as the longstop date for execution of the resolution plan, which will involve a mix of fresh equity, debt conversion, restructuring, some moratorium as well as a fresh line of credit. Sources had indicated that to restart its retail lending operation, DHFL will seek Rs 1,200-1,500 crore per month for at least a period of one year from its lenders, which it will propose to repay via securitisation at a later date.
However, an important part of the resolution for DHFL remains the closure of the deal with a private equity player to raise fresh equity and bring in much-needed cash into the company. On July 22, DHFL had stated that it had received non-binding indicative term sheets as a part of the corporate restructuring plan. The resolution proposal outlined by DHFL to exchanges today did not mention the progress of the proposed stake sale deal.
With DHFL submitting its resolution plan to lenders, banks will soon convene a meeting of key stakeholders under the Inter Creditor Agreement to deliberate on the final contours, the sources added.
State Bank of India has an exposure of about Rs 10,000 crore to DHFL, and is the largest financial creditor to the company. Other lenders include Union Bank of India, Bank of India, Central Bank of India, Andhra Bank, Canara Bank, Punjab National Bank and Corporation Bank, among others.