Kapil Wadhawan, former promoter of Dewan Housing Finance Ltd (DHFL), has repeated his offer to pay the entire principal outstanding of Rs 91, 158 crore to creditors with an upfront payment of Rs 9,000 crore and remaining payment in 7-8 years in the form of debt-to-equity conversion.
In a letter written to DHFL administrator Subramaniakumar on December 19, Wadhawan said he is also willing to agree on a process for sale of DHFL Pramerica Life Insurance (DPLI) and any amount received from the sale will be utilised entirely for the purpose of repayment of the amounts due to the lenders. “This, I believe, would substantially increase the upfront amount that I am offering for repayment to all the lenders of DHFL,” Wadhawan said.
This is the third time Wadhawan is making an offer to creditors on full principal repayment.
Wadhawan’s offer comes in the midst of ongoing Committee of Creditors (CoC) meetings to consider bids for DHFL including those from Piramal Group and Oaktree. In his letter, Wadhawan said despite being permitted to revise bids, the highest bid made by a resolution applicant is only a sum of Rs 36,646 crore "which not only does not satisfy the full value of DHFL but also results in a haircut of more than 60 percent to all the lenders."
The race has narrowed to two top contenders—Piramal Group and Oaktree Management. The CoC, which met on Friday and Saturday to evaluate the bids have sought more clarity from these bidders on their bids, including details on upfront payments to creditors and business besides the part on treatment of DHFL’s insurance business.
Of the three bids considered in the final rounds, Oaktree has the highest bid of around Rs 36, 646 crore followed by Piramal’s Rs 35,550 crore. The third one was Adani Group which offered a slightly lesser amount.
These figures may not be final as the bidders have an ongoing dialogue with CoC wherein the bid sizes are revised and new offers are made. Right now, both Piramal and Oaktree are caught in an aggressive chase with both parties unwilling to let go of the mortgage lender.
In his letter, Wadhawan said his settlement proposal promised repayment of Rs. 54,512 crore more than the next highest bidders.
“If there is any concern about the promoters ability to implement the proposal, I would remind the members of the Committee of Creditors that the erstwhile management of DHFL had submitted financial plan to all the lenders in September 2019 that provided for repayment of 100 percent of the principal owed to all creditors,” Wadhawan said.
This plan, according to the former promoter, was formulated by reputed consultants such as E & Y and SBI Capital Market and based on valuations that had been conducted by renowned consultants such as Knight Frank and Cushman Wakefield who had been appointed by the banks.
Further, Wadhawan said to allay any concerns in relation to the running of the business, he is willing to accept any governance structure that will give the members of the CoC comfort that the business will be run with the highest standards of corporate governance and the best business practices prevalent in the market.
The next meeting of CoC is scheduled later this week, likely on December 23.
State Bank of India is the biggest creditor to DHFL with around Rs 10,000 crore exposure. Bank of India has around Rs 4,125 crore exposure to DHFL, Canara Bank Rs 2,681 crore, NHB Rs 2,434 crore, Union Bank of India Rs 2,378 crore, Syndicate Bank Rs 2,229 crore and Bank of Baroda Rs 2,075 crore. Indian Bank has an exposure of Rs 1,552 crore, Central Bank Rs 1,389 crore, IDBI Bank Rs 999 crore, and HDFC Bank Rs 361 crore. These figures may have changed by now to account for accrued interest.
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