MC: DHFL share price: Stock jumps 32% as lenders assured of no haircut on loans

6 August 2019: Shares of Dewan Housing Finance Corporation rallied 32  percent on August 6 after lenders were assured of no haircut on debt in the company’s resolution plan. The stock closed at Rs 55.40 on the BSE.

The debt-laden company said its creditors would not have to take any haircuts on principal payments under its resolution plan.

The resolution plan is formulated by the company in consultation with the committee and its financial advisors, Ernst & Young.

The company proposed steps or measures towards addressing/aligning asset-liability mismatch.

As part of the resolution plan, DHFL said it would also put a moratorium on repayments and seek funding from banks/National Housing Bank (NHB) to start retail lending.

DHFL, one of largest housing finance companies in India, has roughly Rs 1 lakh crore of debt and is in the process of seeking lender approval on a restructuring designed to help it ride out a liquidity crunch and restart its lending business.

In a separate statement, the company said its auditor Deloitte, Haskins & Sells LLP had resigned, citing irregularities in DHFL’s financial statements for the year ending March 31.

Last month, DHFL filed its long-delayed audited results for the quarter ended March 31 and revealed that its auditors had raised several red flags around its numbers.

After the company announced the resolution plan, sources told CNBC-TV18 that creditors saw the company’s assets in three buckets; retail assets of Rs 35,000 crore that is standard and good, large mortgage loans of Rs 15,000 crore also seen as nearly standard, and SRA and other assets of Rs 35,000 crore that is bad or requires deep moratorium.

According to sources, haircut around 30 percent is expected and small public depositors may be given preferential treatment. Creditors eagerly await approval from SEBI to let mutual funds participate in the resolution process.

Moneycontrol reported

FE: SBI again seeks EOIs for Videocon’s offshore assets

6 August 2019: State Bank of India (SBI) has sought expressions of interest (EoIs) for the sale of overseas oil and gas assets owned by Videocon Oil Ventures (VOVL) on behalf of a consortium of lenders, according to a public notice. This is the second time since October 2018 that banks have sought EoIs for these assets.

While SBI Capital Markets (SBICaps) was managing the process for lenders the last time, Deloitte Touche Tohmatsu India has been mandated to carry out the fresh process.

The sale will be carried out to monetise upstream oil and gas assets located in Brazil and Indonesia belonging to VOVL, which is a subsidiary of Videocon Industries. The parent company is currently undergoing the corporate insolvency resolution process (CIRP).

In July 2018, SBICaps had sought bids for the appointment of consultants who would validate the costs associated with the running of VOVL’s upstream oil and gas assets in the two geographies.

VOVL is understood to be one of the accounts that were to be resolved by August 27 as per the Reserve Bank of India’s (RBI) February 12 circular, which was struck down by the Supreme Court as ultra vires in April 2019. Thereafter, it was replaced by the June 7 circular, which tweaked some of the provisions and guidelines of its predecessor.

Fifty-four financial creditors to Videocon Industries had filed claims worth `59,452 crore as on December 24, of which claims worth `57,444 crore were admitted. SBI had claimed `11,175 crore, of which `10,979 crore was admitted. Other lenders with large claims were IDBI Bank, which saw almost all of its `9,561-crore claim being admitted, and Central Bank of India that claimed `5,067 crore and saw 5,063 crore being admitted.

On January 1, 2018, SBI filed an insolvency petition against Videocon Industries in the Mumbai Bench of the National Company Law Tribunal, claiming that the company had defaulted on facilities worth `498.63 crore extended by the bank and its former associates. The petition was admitted on June 6 last year.

The Financial Express reported