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Oaktree hints at legal action over 'misrepresentation' of DHFL offer

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According to Oaktree, in spite of presenting a bid that offers maximum value for all stakeholders in the DHFL race, there appears to be a consistent campaign to misrepresent information on its proposals.

Oaktree hints at legal action over 'misrepresentation' of DHFL offer
Oaktree Capital, one of the bidders for DHFL, in a letter to the Committee of Creditors (CoC), has said that its offer for the troubled housing finance company is being consistently misrepresented and that evaluation of its financial proposals based on incorrect information may be subject to judicial, administrative and investigative review.
According to Oaktree, in spite of presenting a bid that offers maximum value for all stakeholders, there appears to be a consistent campaign to misrepresent information on its proposals.
"In terms of total recovery being offered to Financial Creditors as well as net present value, Oaktree’s financial proposal is clearly superior to all other PRAs," said the company in the letter.
"Information is not only being presented in an incomplete and inaccurate manner but also in order to discredit Oaktree’s bid and favour the Second Highest Bidder," the letter further read.
Oaktree and Piramal group are in a close race for DHFL. The Adani group is also one of the bidders.
Oaktree said in the letter that its bid's net present value is Rs 36,418 crore, higher than the 34,966-crore bid of the second-highest bidder.
"If Oaktree’s bid were to be evaluated on the basis of incorrect information or an erroneous presentation of the financial proposal, such evaluation would almost certainly be subject to judicial, administrative and investigative review," the company said.
An Oaktree spokesperson, in a statement, reiterated that the company has become increasingly concerned that certain pre-determinations have been made in relation to the bids being presented by it.
"Oaktree submitted the highest total bid for DHFL in each successive round of the bidding process with our final bid providing a total recovery of INR 38,400 crores for lenders which is INR 1,150 crores higher than the 2nd highest bid and a net present value of INR 36,418 crores for lenders which is INR 1,452 crores higher than the 2nd highest bid," stated the spokesperson.
"Lenders have compared the 2nd highest Bidder’s proposal to infuse fresh equity capital into a co-mingled entity on an uncommitted basis with Oaktree’s proposal to infuse equity capital in a clean entity for the sole benefit of DHFL creditors on a committed basis," the spokesperson added in the statement.
A Piramal spokesperson termed claims made by Oaktree in its latest letter to CoC as "mistaken belief".
"The Oaktree bid is short on upfront cash, short on NPV, short on the overall score, un-implementable due to insurance-related complications, and leaves lenders with weak debt paper due to the sub-debt structure offered by Oaktree to themselves," said the Piramal spokesperson in a statement.
"This mail from the applicant appears to be under the mistaken belief that threatening COC members with consequences is going to alter these facts and change the course of a legally run, transparent process in our country," stated the spokesperson.
On Piramal Group's offer, the company spokesperson added, "The Piramal plan merges DHFL with an AA-rated entity, offers over Rs 10,000 crore of equity immediately, and provides clarity on quality and secondary market valuation of NCDs. The alternative plan is a highly leveraged structure with minimal equity."

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