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DHFL shares rally 18% on hopes of receiving lenders' approval on final resolution plan by July end

DHFL shares rallied nearly 18 per cent in intra-day trade to Rs 61.80 apiece on the BSE, after slipping nearly 4 per cent in early deals, amid hopes of receiving lenders' approval on the final resolution plan

twitter-logo BusinessToday.In   New Delhi     Last Updated: July 23, 2019  | 17:09 IST
DHFL shares rally 18% on hopes of receiving lenders' approval on final resolution plan by July end
DHFL shares closed trade at Rs 60.05 apiece, up 14.16 per cent, on the BSE

Shares of debt-ridden Dewan Housing Finance Corporation (DHFL) rallied nearly 18 per cent in intra-day trade on the Bombay Stock Exchange, after slipping nearly 4 per cent in early deals, amid hopes of receiving lenders' approval on the final resolution plan by end of July. Insolvency resolution plan refers to restructuring of debt of the company to pay its lenders over an extended period of time.

The consortium of 31 lenders to the cash-strapped housing finance company had last met on July 1, to sign an inter-creditor agreement to work on a potential resolution strategy for the company and had already appointed advisors.

The Wadhawan family, the promoters of DHFL, who currently holds close to 40 percent stake in the company, has been looking at various ways of coming out of the stress which first came to light late last year following the Infrastructure Leasing & Financial Services Limited (IL&FS) crisis. Private equity firms Lone Star, AION Capital and KKR are in talks with promoters for a strategic stake, PTI reported quoting sources.

"The company is in the process of submitting a resolution plan to the lenders and the lenders are expected to give an in-principle approval to the plan by end of July 2019," DHFL said in a filing to the Bombay Stock Exchange after market hours on Monday.

Early today, the DHFL share opened lower and tumbled nearly 4 per cent after the Mumbai-based housing finance company filed its long-delayed audited results for the fourth quarter ended March 31, and revealed that its auditors had raised several red flags around its numbers.

Also Read: Auditors to DHFL raise red flags around quarterly results

After a bearish start, DHFL shares price rebounded as much as 17.49 per cent to touch an intra-day high of Rs 61.80 apiece on the Bombay Stock Exchange (BSE), amid hopes of receiving lenders' approval on the final resolution plan. The stock closed trade at Rs 60.05 apiece, up 14.16 per cent, on the BSE.

On the National Stock Exchange, DHFL share ended at Rs 59.65 apiece, up 13.62 per cent, as compared to previous closing price of Rs 52.50. The stock opened flat at Rs 52.40 and touched an intra-day high of Rs 63 during the day's trade.

In a meeting that went till late hours on July 22, the board took on record that the company received non-binding indicative term sheets as a part of the corporate restructuring plan and any proposal approved will constitute a part of the resolution plan.

DHFL has suffered huge loss since beginning of this year after several brokerages downgrades the company's credit ratings.

The ability of the company to continue as a going concern is predicated upon its ability to monetize its assets, secure funding from the bankers / investors, restructure its liabilities and recommence its operations, the debt-laden company said in the exchange filing while releasing its audited results for March quarter.

The company further said that a panel has been set up to formulate, consider and finalise a resolution plan for debt recast. The committee has been empowered to call shareholder meetings to implement the resolution plan, it said.

Edited by Chitranjan Kumar

Also Read: Rana Kapoor, Morgan Credits pledge 7.34% stake in YES Bank; share recovers after initial hiccup

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