Shares of Dewan Housing Financial Ltd (DHFL) plunged over 18 percent on Thursday after rating agencies
Crisil and ICRA downgraded the company's Rs 850 crore commercial paper (CP) to “D” from "A4+" and "A4" respectively. Care Ratings also downgraded its Rs 17,655 crore non-convertible debentures from 'BBB-' to 'D' recently.
DHFL shares fell as much as 18.29 percent intraday to Rs 91.30 per share on the NSE, its lowest since December 2013. DHFL's stock price has fallen about 60 percent this year and over 80 percent in last one year.
At 9:30 the stock was trading 11.90 percent lower at Rs 98.45 per share as compared to a 0.19 per cent fall for the Nifty 50 at 11,999.10.
Meanwhile, the also company informed the bourses that the
RBI has granted approval to disinvest the company’s entire stake in Avanse Financial Services to Warburg Pincus. > DHFL says downgrades by rating agencies unwarranted, questions rationale
The BSE filing said that the company has accorded approval on March 16 to disinvest the company’s entire shareholding (30.63 percent or 1.92 lakh shares) in Avanse Financial Services Limited to Olive Vine Investment, an affiliate of the Warburg Pincus Group.
“In continuation to the above, we wish to inform you that the Reserve Bank of India (RBI) vide its letters received by Avanse on 4th June 2019 has granted its prior approval for change in control/ownership and management of Avanse, subject to conditions. Accordingly, the divestment of the Company's stake in Avanse is expected to be completed shortly,” the BSE filing added.
The Mumbai-based DHFL has Rs 850 crore of outstanding CPs, of which, Rs 750 crore is due in June 2019.
"The rating revision factors in further deterioration in the company’s liquidity profile and delays in a meeting scheduled debt obligation on June 04, 2019," said ICRA in a statement.
Meanwhile, Crisil stated that "the downgrading reflects delays in debt servicing by DHFL on some of its non-convertible debentures (NCDs) - not rated by CRISIL - because of inadequate liquidity."
The company in its
response to the re-ratings said, "the action by the rating agencies is extremely surprising as the company has been making and continues to make substantial efforts in ensuring no defaults on any bonds, repayment of its financial obligations. These actions are unwarranted and the Company is seeking clarification on the rationale that predicts DHFL’s inability to service pay‐outs on the due dates. Such a speculative rating rationale is not adequate."
It also added that since September 2018, DHFL has repaid close to Rs 40,000 crores of financial obligation. To ensure adequate liquidity to meet the repayments, DHFL also sold its strategic retail assets including Aadhar, Avanse and DHFL Pramerica Asset Managers. The Company is committed towards ensuring repayment of all its obligations as well as onboarding the strategic partner for its business.
According to CLSA, the recent default of DHFL on Rs 1000 crore in dues can expose Rs 1 lakh crore in borrowing to the risk of default/haircuts. The timely consummation of deleveraging/ recapitalisation is key to resume servicing, it added.
Meanwhile, promoters of the company are also looking to
finalise the sale of their stake in a month, sources told CNBC-TV18. Apollo Global, ICICI Venture-backed Aion Capital, Lone Star, and Cerebrus are among the potential buyers.
According to sources, Blackstone, which has agreed to buy nearly 80 percent of DHFL unit Aadhar Housing Finance in February, is expected to pay Rs 25,000 crore for the Aaadhar deal to DHFL by June 10. DHFL will pay dues of around Rs 1,000 crore on June 10 or June 11, they added.
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