During the moratorium, DHFL would only pay interest owed on outstanding bonds, sources told ET. The company expects a slightly longer moratorium on principal repayments, said an executive with first-hand knowledge of the matter. DHFL also negotiates longer loan repayment terms of up to 3 years with its bankers.
A new debt restructuring plan will be in place by July 25 and will be operational by September 25. The restructuring will inject the necessary liquidity into the business.
New funding of Rs 1200-1,500 crore
Bondholders have Rs 45,000 crore exposure to Mumbai-based DHFL, while high street lenders loaned the house financier another Rs 35,000 crore.
Bond investors and lenders want a sustainable and financially viable solution to DHFL’s debt problem, and do not want a makeshift arrangement leading to steep haircuts.
“Other investors / lenders besides banks should also participate in DHFL’s resolution plan to get the value of their investments,” said A Balasubramanian, CEO of Aditya Birla Sun Life AMC. “A balanced resolution plan is the need of the hour to calm market sentiment instead of prolonging litigation.”
In the secondary market, DHFL bonds produced up to 67%. Some specialized funds had offered to buy these newspapers at very advantageous prices. However, only a few deals have taken place with most investors, including mutual funds and insurers, refusing such unbalanced offers.
“We are negotiating for the loans to be extended for up to 3 years without any discount because the loans are tied to assets,” a company executive said on condition of anonymity. “We are also looking for new loans of Rs 1,200 crore to Rs 1,500 crore each month to start disbursements.”
DHFL will launch loans for banks with the new funding each month.
He is seeking to pay Rs 4,018 crore in intercreditor deposits shortly. The company raised Rs 205 crore by selling 9.15% in Aadhar Housing Finance and another Rs 340 crore by selling 31% in Avanse Financial Services.
Under financial stress, DHFL reported a net loss of Rs 2,223 crore in the fourth quarter of FY19, compared to a profit of Rs 134 crore in the last quarter of FY18. This performance translated into an increase provisions and a slowdown in disbursements. It made an additional supply of Rs 3,280 crore in the fourth quarter of fiscal 19.