DHFL floats draft resolution plan, proposes to convert debt into equity

Debt-ridden mortgage lender DHFL on Saturday floated a draft resolution plan, proposing to convert debt into equity, subject to the approval of investors and bankers. The Wadhawan family, who owns a little over 39% in the company, has been looking at ways of coming out of the stress, which first came to light late last year following the IL&FS bankruptcy. These include selling stakes in group entities, including in the flagship, to the extent of giving up half of their stake.

The company had, on 27 September, held a meeting to present the draft resolution plan to all institutional creditors, including banks, financial institutions, mutual funds, insurance companies and other institutional bond holders, and to apprise them of the various steps required to be undertaken to implement the resolution plan, DHFL said in a filing to stock exchanges on Saturday. A price of Rs 54 per share was assumed for conversion of debt into equity by lenders to acquire 51% in the company, it said.

This proposed resolution plan, including all projections, cash flows and computation of liabilities, was based on reports received from various consultants appointed by lenders and the company, it said. The cash flow projections factored for the proposed resolution plan do not take into account any tax impact that might occur, in the hands of borrowers, it said. The repayment or restructuring of terms of public deposits was under discussion with relevant stakeholders and regulators and could be subject to amendment, it added.

Also read: DHFL's lenders mull emergency funding of Rs 7,000 crore to keep company afloat