Finance

DHFL lenders set to declare 65% of its loans as unsustainable, says report

Updated : August 23, 2019 08:37 AM IST

As per the sources in the know, of the total Rs 24,700 crore of unsustainable debts or the portion of the loans that crisis led HFC company through its cash flow, Rs 760 crore will be converted to equity at Rs 54 per share, the report said.

Sustainable loans of Rs 13,300 crore will receive an annual interest of 8.5 percent which has to be repaid over eight years, the report added.

As per the company's investor presentation, DHFL's total bank debt amounts to Rs 38,000 crore as on December 31.

DHFL lenders set to declare 65% of its loans as unsustainable, says report

As part of a debt settlement plan, lenders to Dewan Housing Finance Corp Ltd (DHFL) may likely declare 65 percent of loans outstanding to the company as unsustainable, Mint reported citing sources.

Of the total Rs 24,700 crore of unsustainable debt, Rs 760 crore will be converted to equity at Rs 54 per share, the report said, adding that Rs 8,740 crore will be converted into unsecured debt that won't guarantee any interest payments.

The remaining Rs 15,200 crore of sustainable debt will be cast into 10-year non-convertible debentures with a coupon rate of 6 percent which will be allocated to its lenders, the report said.

Sustainable loans of Rs 13,300 crore will receive an annual interest of 8.5 percent which has to be repaid over eight years, the report added.

DHFL's issues rose after the non-banking financial sector (NBFC) was led into a deepening crisis after the Infrastructure Lending and Financial Services defaulted in payments last year. DHFL's lenders are structuring a resolution plan after the mortgage lender failed to repay the loans and defaulted.

“We will have to take a hit on the unsustainable portion of the debt if this plan is implemented," said the first banker, adding that the resolution plan will be finalised by the month-end. He explained that if shares are converted at Rs 54 and the market price is lower, lenders will take a hit on a mark-to-market basis.

As per the company's investor presentation, DHFL's total bank debt amounts to Rs 38,000 crore as on December 31.

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