Dewan Housing Finance Corporation (DHFL), which finds itself in the middle of a liquidity crisis, is set to present its proposal for a resolution to its lenders today, sources told CNBC-TV18.
The proposal DHFL submits to its lenders will, by no means, be the final resolution plan, and will be scrutinised by all banks in the consortium before it can be implemented, explained the sources, who did not want to be named.
Additionally, all other stakeholders — insurance companies, mutual funds, provident funds and those who have lent to DHFL would also have to agree to the proposal.
The sources also said 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.
The mortgage lender is also hoping to restart business on a smaller scale by August, and therefore, will be seeking 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, added the sources.
DHFL will propose to raise about Rs 7,000 crore via stake sale in the company to a private equity investor, said the sources, adding it remains in talks with three potential suitors — Aion Capital, Cerebrus Capital and Oaktree. However, Aion Capital is seen leading the race, said the sources.
DHFL promoters want their stake to remain at 20-25 percent, even after the deal with the private equity investor is executed, sources aware of the matter told CNBC-TV18. The promoter Wadhawan family holds about 39 percent stake in DHFL currently.
While DHFL will propose this as the roadmap for resolution, banking sources CNBC-TV18 spoke to said the resolution plan will see a change in promoters of the company, with the new investor taking a controlling stake.
The banking sources said that once the plan is implemented, Wadhawan family may no longer remain promoters and that even the SBI-led consortium of banks will pick up some equity stake in the company.
The resolution plan, besides fresh equity infusion, would comprise of change in repayment tenure of part of loans under restructuring, some conversion of debt into equity, moratorium grant and a new line of credit to DHFL, added the banking sources, without disclosing the quantum of fresh loans that could be granted.
An executive from a bank with large exposure to DHFL said that the account still is in a special mention accounts (SMA) category and has not slipped into non-performing accounts (NPA) status yet.
Once DHFL submits its proposal to the lenders today, the banks will be convening a meeting to study the proposal, even as they continue discussions with the bondholder, other stakeholders to build consensus about a resolution roadmap, and the success of the resolution plan will hinge on this, as well as the completion of the deal with a private equity investor, added the sources.