Q4 Results: DHFL Expects Approval Of Resolution Plan By July-End

Debt-ridden Dewan Housing Finance Corporation Ltd. said it expects an in-principle approval from its lenders for its resolution plan by month-end.

The ability of the company to continue as a going concern is predicated upon its ability to monetise its assets, secure funding from the bankers or investors, restructure its liabilities and recommence its operations, DHFL said in a late evening regulatory filing while releasing its audited results.

The company said that it was in the process of submitting a resolution plan to the lenders who are expected to give in-principle approval by month-end.

It further said that DHFL has received non-binding indicative term sheets as part of the proposed corporate restructuring of the company and any proposals approved will constitute a part of the resolution plan.

Promoters of mortgage lender are in talks with private equity firms and are expecting to garner $1 billion (about Rs 6,900 crore) by selling nearly 50 percent of their holdings, sources said.

The Wadhawan family, the promoters of the company, currently holds close to 40 percent stake in the company.

Private equity firms Lone Star, AION Capital and KKR are in talks with promoters for a strategic stake, sources said. It further said that the company is undergoing substantial financial stress since the second half of the last financial year.

DHFL has suffered consistent downgrades in its credit ratings since February 2019. On June 5, 2019, its credit rating was reduced to ‘default grade’ despite no default till that date.

“The Company’s ability to raise funds has been substantially impaired and the business has been brought to a standstill with there being minimal/virtually no disbursements. These developments may raise a significant doubt on the ability of the Company to continue as a going concern,” it said.

It further said that the company is taking active steps to monetise its assets and is in discussions with multiple Indian banks and international financial institutions to sell off its retail as well as wholesale portfolio.