After multiple rounds of bidding, and several revisions in bids by the suitors, the creditors' committee of Dewan Housing Finance Limited (DHFL) is set to begin voting on the final resolution plans, CNBC-TV18 reported citing sources.
“We will begin the voting process tonight, and the voting window will remain open till January 14,” a senior banking executive with a public sector bank with significant exposure to DHFL told the business channel. All the resolution plans submitted so far by the four suitors - Oaktree Capital, Piramal Group, Adani Group and SC Lowy- will be put to vote.
According to the report, “The bidder with the highest number of votes from the CoC (committee of creditors), subject of course to crossing the minimum threshold of 66 percent of votes, will be declared the winning bidder.”
Oaktree Capital and Piramal Group are seen neck and neck in the race to acquire DHFL, with Adani Group’s offer for the entire book a good Rs 5,000 crore lower than the highest bidders. SC Lowy did not bid for the entire book, and is the lowest by far and not seen as a contender by the lenders.
Last week, both Piramal Group and then Oaktree Capital raised their offers by Rs 1,700 crore to secure the lenders’ favour.
As for the final offers that will be considered by the CoC while voting on plans, Oaktree Capital’s proposal stands at Rs 38,400 crore for the entire book, compared to Rs 37,250 crore offered by Piramal Group. Adani Group’s offer for the entire book of DHFL stood at Rs 33,110 crore, as per people in the know.
Oaktree Capital’s offer:
Of the total Rs 38,400 crore offered by Oaktree Capital, Rs 11,700 crore is in the form of upfront cash. Oaktree has also offered Rs 3,000 crore of cash to lenders from the interest earned on the existing cash on DHFL’s books, another Rs 1,000 crore for the insurance business, and Rs 1,700 additional cash for interest income after NCLT approval. This takes the total cash for the creditors at Rs 17,400 crore. The remaining Rs 21,000 crore is in the form of instruments payable over 7 years, as per people directly aware of the offer. Oaktree’s takeover of DHFL would also result in DHFL’s existing shareholders’ equity being wiped down to zero, which has been the case with almost all resolutions under the IBC.
Piramal Group’s offer:
Piramal Group’s total offer of Rs 37,250 crore includes a higher upfront cash payment of Rs 12,700 crore to the creditors. Piramal Group has also offered Rs 3,000 crore of cash to lenders from the interest earned on the existing cash on DHFL’s books, another Rs 1,000 crore for the insurance stake, and Rs 1,000 additional cash for interest income after NCLT approval. This takes the total cash for the creditors at Rs 17,700 crore. The remaining Rs 19,550 crore is in the form of instruments payable over 10 years. Piramal Group’s takeover of the DHFL business would also entail writing off existing shareholders’ equity to zero, the report said.
DHFL is the first financial services company to be sent to NCLT under IBC and is facing claims of Rs 87,031 crore from financial creditors led by SBI, Union Bank of India and others.