Key talking points of the meeting will include restructuring of loans to ensure repayment, fresh working capital support, inducting a new financial investor and a new management team to be put in place.
To work out a rescue package for Dewan Housing Finance Corporation (DHFL), its lenders will meet in the first week of July, reports Business Standard. The key talking points of the meeting will include restructuring of loans to ensure repayment, fresh working capital support, inducting a new financial investor and a new management team to be put in place.
The banking system’s exposure to the housing finance company stands at over Rs 40,000 crore. Among these lenders are State Bank of India, Axis Bank, HDFC Bank, ICICI Bank and Union Bank of India. Assessment of addressable levels of debt and ways to restructure the loans by extending their tenure and through fresh liquidity support are some major points of discussion with lenders, a senior banker involved in the transaction told the paper.
While foreign alternative investment management fund Oaktree Capital has expressed interest in the housing company’s wholesale portfolio, private equity firms like AION Capital (a joint venture between ICICI Venture and Apollo Capital Management) and Lone Star are eyeing a stake in DHFL.
An arrangement for banks to buy some part of the beleaguered company’s portfolio to reduce their loan exposure was also hinted at, but not via securitisation. However, the responsibility for collection/servicing of loans would also be taken on by banks that purchase them as they would not want DHFL to be involved.
Making some of DHFL’s assets sweat is another aspect that is being looked at. Several projects to which the DHFL had lent are facing roadblocks like inability to execute a sale, overextended developers and delayed execution. The article quoted another banker as saying that this needs to be dealt with in order to look at viable projects and assess the level of working capital requirements and how that can be arranged.
The Wadhawan family currently owns 39.21 percent stake in the housing finance firm. However, strategic investors are being looked at, who would then bring in fresh equity or buy a part of the promoter’s stake, reducing the latter’s stake to half of their current holding. Kapil Wadhawan is likely to continue as the Chairman, sources told the paper, while a new managing director will be appointed by the new partner.The timely resolution of the DHFL mess is important due to the amount of liabilities involved. There has been a deterioration in the liquidity profile of DHFL, rating agency CARE said earlier this month. Cash and liquid investments, including those under the statutory liquidity ratio, fell from Rs 4,668 crore at the end of FY19 to Rs 2,775 crore as on April 30.The Great Diwali Discount!
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