FE: DHFL claims cross Rs 1 lakh crore

24 March 2020: The amount claimed by creditors of troubled Dewan Housing Finance Corporation (DHFL) has crossed Rs 1 lakh crore, sources told FE. The sources added that 70,913 creditors “have claimed Rs 1,00,064 crore from DHFL till now.” Financial creditors, including bondholders, have claimed Rs 86,469 crore from DHFL.

India’s largest lender State Bank of India, including SBI Singapore, is the lead creditor with a claim of Rs 10,083 crore, followed by Bank of India, which has claimed Rs 4,126 crore. Canara Bank has claimed Rs 2,682 crore, National Housing Bank (NHB) has claimed Rs 2,434 crore, Union Bank of India `2,378 crore and Syndicate Bank Rs 2,229 crore, among other lenders.

The total amount also includes claims of Rs 2,500 crore from promoter entity of Wadhawan Global Capital (WGC). The claim relates to the exercising of a put option by Wadhawan Global Capital (WGC) and was filed by Dheeraj Wadhawan on behalf of the group company.

The troubled lender is undergoing a resolution process under the Insolvency and Bankruptcy Code, 2016, after the Mumbai bench of the National Company Law Tribunal (NCLT) admitted the case on December 2, 2019. DHFL is evaluating expression of interests received for the company. FE reported earlier that lenders discussed the revised evaluation matrix of bidders in the CoC meeting held on March 12. During the meeting, it was decided that 5% more weightage will be given to net present value (NPV) compared with the previous plan. The new evaluation criteria gives 40% weightage to NPV, 30% weightage to cash upfront, 10% for capital infusion, 5% to equity stake and remaining 15% evaluation will be done based on qualitative parameters.

FE has learned that 24 applicants have submitted expressions of interest (EoIs) for DHFL. The company had given the option to bidders to bid for the whole company or in parts. Under Option I, suitors were invited to submit EoIs for the entire business of DHFL. Under Option II, prospective resolution applicants were invited to submit EoIs for one or more groups or a combination of any assets in isolation across different groups of DHFL. The bids for the bankrupt mortgage lender are to be invited across three areas – retail, non-retail and slum rehabilitation authority (SRA) loans.

Source: Financial Express reported

CNBCtv18: NCLT admits HDIL for IBC proceedings

20 August 2019: Housing Development and Infrastructure Limited (HDIL) has informed the Bombay Stock Exchange that it has been admitted under the provisions of the Insolvency Bankruptcy Code (IBC) in National Company Law Tribunal (NCLT).

It has also stated that the company will approach the National Company Law Appellate Tribunal (NCLAT) against the order passed by NCLT.

It’s noteworthy that Bank of India filed petition under Section 7 of IBC to initiate insolvency proceedings against HDIL.

The NCLT on June 4 had warned given HDIL four weeks time to pay Rs 98 crore to Bank of India and warned the company that faliure to do so would initiate insolvency proceedings.

Mumbai-based HDIL owes Bank of India (BoI) approximately Rs 520 crore and had agreed to pay its lenders in tranches.

HDIL, as per its 2017-18 annual report, has a total debt of around Rs 2,400 crore.

HDIL’s stock price fell four percent today and it’s currently valued at Rs 10.87 per share on BSE.

As reported by CNBCTV18

BT: Union Bank classifies Suzlon Energy’s loan account as NPA; other banks may follow suit

22 July 2019: Wind turbine major Suzlon Energy Ltd’s financial woes continue to mount. A week after defaulting on the payment of outstanding bonds worth Rs 1,182 crore, its loan account with the Union Bank of India has been classified as a bad loan. The Tulsi Tanti-led company had reported a net loss of Rs 6,494 crore in the March quarter on a standalone basis.

Sources in the know told Mint that Union Bank updated the status of the account as non-performing in the RBI’s Central Repository of Information on Large Credits (CRILC) database in the quarter ended June 30, after repayments were delayed by over 90 days. CRILC is a borrower level supervisory dataset with a threshold in aggregate exposure of Rs 50 million. Worse, the buzz is that more banks are likely to follow suit as the stressed wind turbine maker struggles with its debt pile. The company boasted a consolidated net term debt of Rs 7,761 crore and a working capital debt of Rs 3,380 crore by the end of FY19.

The domino effect

“While Union Bank’s exposure is a little over Rs 70 crore and not that large, it will be incumbent upon other members of the consortium to declare it an NPA as well,” a source told the daily. Other lenders to Suzlon Energy include Bank of India, Bank of Baroda, Central Bank of India, IDBI Bank and Punjab National Bank. The NPA tag by Union Bank will force these other banks to set aside money to cover potential losses on their respective exposures. Under the RBI’s asset classification guidelines, banks have to set aside 15 per cent of their outstanding loans to an NPA account as provisions against a mere 0.4 per cent for standard accounts.

Other defaults

Last Wednesday, the Pune-based company announced defaulting on its bond payment and initiated work on a resolution plan amid talks with Canadian investment major Brookfield Asset Management to sell a majority stake. Notably, discussions are on between Suzlon and Brookfield for a one-time settlement plan with creditors to restructure outstanding bank loans, and Brookfield may come up with a binding offer by the end of this month.

Before this, the company had defaulted on its foreign currency convertible bonds (FCCBs) worth $221 million (Rs 1,517.8 crore) in October 2012 despite failed attempts with FCCB holders for a four-month extension. The company faced a similar crisis of the shortage of working capital to execute a large pipeline of orders (then nearly $7.7 billion and a majority of orders were from the sold-off subsidiary REpower). It had posted losses for three consecutive years. Despite a few paybacks, the company’s debt had swelled to over Rs 10,000 crore. That forced the company to seek a bailout from lenders via Corporate Debt Restructuring (CDR).

How did Suzlon reach this point?

The downfall of Suzlon, which grew as the world’s fifth largest wind turbine maker with revenues of over Rs 26,000 crore in 2008-09, is a classic case of aggressive global expansion without reading future business prospects. The 2008 global financial downturn sucked away a lot of the company’s fortunes and though it managed to subsequently recover and once again manage a strong order book, the global financial slowdown in 2018 again threw a spanner in the works. Soon raw material prices, including steel prices, rose and many orders were postponed.

The shift to auction-based capacity additions – from the earlier system of feed-in tariffs – and the resultant disruption to the market also caught Suzlon Energy, as well as other stakeholders, off-guard. As a result of the change, wind capacity additions in India dropped to multi-year low of 1,523 MW in the last fiscal, down over 72 per cent from 5,500 MW in FY17. Suzlon Energy’s debt binge and its inability to move in time on stake sales and asset monetisation to reduce the debt pile, only made matters worse.

The company now has to worry about its looming debt schedule – in FY20, Suzlon has to pay back Rs 1,928 crore, Rs 835 crore in FY21, Rs 926 crore in FY22 and Rs 4,483 crore in FY23 and beyond.

As reported on BusinessToday

Zeebiz: Banks under PCA framework to be barred from buying retail assets of NBFCs

12 July 2019: State-run lenders currently under the RBI`s Prompt Corrective Action (PCA) framework on account of bad loans and heavily loss making banks may not be allowed to buy the pooled retail assets of non-banking finance companies (NBFCs) under the scheme announced in the Budget, official sources said, which may leave space for only SBI, Canara Bank, Bank of India, Bank of Baroda to make such purchases.

In the Budget 2019-20, the Centre has allowed a one-time, partial credit guarantee of six months to public sector banks (PSBs) on their first loss of up to 10 per cent for purchase of high-rated pooled NBFC assets of Rs 1 lakh crore. 

This is likely to provide the better-run NBFCs access to liquidity. The partial credit guarantee from the government would help NBFCs raise funds from PSBs, providing them urgently needed funding support . 

They PSBs will be allowed to buy only `AAA` rated retail assets and those a notch below, the sources said. They, however, have their own non-performing assets (NPAs or bad loans) issues and have just started to slowly come out of their bad loan situation but are still not out of the woods. 

While the eligibility norms for PSBs to buy such assets are still to be issued by the Reserve Bank of India (RBI), the Finance Ministry and RBI will ensure that banks currently under lending restrictions under the PCA, or non-PCA banks incurring huge losses and still have an asset-liablity mismatch, will not buy the NBFC retail assets, according to informed sources here.

In a move to help both the NBFCs and PSBs, the RBI had also announced a scheme allowing banks to borrow from the central bank by pledging their excess government bond holdings to fund the purchase of NBFC assets, which can release liquidity of up to Rs 1.34 lakh crore. 

Bank of Baroda reported narrowing its losses down to Rs 991.37 crore in the January-March quarter from Rs 3,102.34 crore in the corresponding quarter last year. Punjab National Bank posted a loss of Rs 4,750 crore for the last quarter of the fiscal ending March 2019. 

The State Bank of India (SBI) posted a net profit of Rs 838 crore in the March quarter against a loss of Rs 7,718 crore in the same period a year earlier. While Central Bank of India`s fourth quarter loss widened to Rs 2,477 crore on high provisioning, the Canara Bank loss in the same quarter narrowed to Rs 551 crore on lower bad loans. 

Bank of India returned in the black after two quarters by posting a profit of Rs 252 crore for the quarter ended March 31, against a loss of Rs 3,969 crore during the same period last year. 

The Modi government recapitalised state-run lenders with Rs 1.6 lakh crore in 2018-19, the highest ever so far. The move helped five banks come out of the PCA framework. 

In her maiden Union Budget presented last week, Finance Minister Nirmala Sitharaman announced a Rs 70,000 crore capital infusion into PSBs in an effort to boost credit. Only five of these — United Bank of India, UCO Bank, Central Bank of India, Indian Overseas Bank and Dena Bank — now remain under the PCA framework.

A year after a series of defaults by Infrastructure Leasing and Financial Services (IL&FS) forced the government to intervene, the problems of India`s NBFCs are entering a new phase, which poses a new challenge for the RBI. 

India`s financial regulator in its latest Financial Stability Report has spelt out its concerns about the implications of the country`s spreading shadow banking crisis, saying any failure among the largest of the NBFCs could cause losses comparable to a collapse among commercial banks.

As reported on Zeebiz

ET: Banks expect Adlabs resolution before Sept outside NCLT

2 July 2019: The Union Bank-led consortium of 13 banks is hopeful of finding a resolution for their Rs 1,100-crore exposure to Adlabs Entertainment before September outside the NCLT either by selling their distressed loans to ARCs or finding an investor, two sources familiar with the development said.

The bankers, however, are more hopeful and keen on selling their loans to asset reconstruction companies, and a loan auction is likely to begin shortly, said the sources.

It can be noted that while Tourism Finance Corporation had moved the Mumbai NCLT last September to recover its Rs 46 crore dues from the company, state-run Corporation Bank had filed for bankruptcy in early June to recover its Rs 80-crore loan. However, the bankruptcy tribunal has not approved both these pleas as 11 other banks are not keen on a bankruptcy process.

This has renewed the hope of other 11 lenders to find a resolution, said a banker. The bankruptcy laws demand 75 percent of the lenders consent for a plea to be admitted for insolvency proceedings.

Apart from Union Bank, Adlabss bankers include Bank of Baroda, Indian Overseas Bank, Bank of India, Central Bank, Syndicate Bank, Punjab & Sindh Bank and Jammu & Kashmir Bank among others.

The lenders to the Manmohan Shetty-owned company that runs the countrys first theme park Imagica near here on the Mumbai-Pune Expressway along with a 5-star hotel are at advanced stage of discussions for an out-of-court settlement, which includes selling their loans to an ARC or finding a financial investor a buyer for a majority stake from the popular Hindi film producer Shetty who owns 32 percent in the firm. The rest of the stakes in the company are with the public.

We are in the process of soliciting consent from other 11 banks to sell our loan exposure collectively to an investor or an ARC, said the banker cited above.

When contacted a senior official at Union Bank, which is the lead lender with an exposure of Rs 240 crore to the company, confirmed to PTI that “they are at an advanced stage of discussions with all interested parties,” but refused to share details.

Adlabs refused to confirm or deny the developments, saying, the management is in active conversation with the lenders to find a resolution outside the bankruptcy tribunal.

There have been reports that asset reconstruction company Arcil has expressed interest in taking over the debt. In fact, Arcil along with its hedge fund partner Avenue Capital has submitted a proposal to the creditors to take over the stressed loans.

Union Bank had in January appointed financial consultant BDO to advice it on the loan sale, while the company has roped in Imap India to advise it on a debt resolution.

Another source said the company is in negotiations with some financial investors led by Shaan Agro & Reality India which already owns a 7.85 percent in Adlabs. Another investor who has shown interest is Catalytic Solutions & Management Services, floated by Ashutosh Maheshwari, who was earlier with Rabobank and Motilal Oswal.

This consortium is keen on rescuing the company, though it isnt yet clear whether it would buy the remaining equity or partner with Shetty for a one-time settlement with creditors, the source said.

Apart from the theme park spread over 130 acres at Khopoli and the 287-key Novotel hotel nearby, Adlabs has a 204-acre land parcel nearby which it has been trying to sell for long but landed in a legal tangle.

The Imagica runs a waterpark, an indoor snow-based theme park and Bollywood theme park apart from rollercoasters. The Novotel hotel is 70 percent-owned by Paris-based hotel chain operator Accor group.

In FY18 it had signed a term sheet with big bull Radhakishan Damanis Bright Star Investments for the hotel, along with a 6.1 acre underlying land and an additional 2.9 acres for over Rs 215 crore, but the deal did not go through as banks refused to give their consent for the deal.

The Adlabs counter closed 2.34 percent up on the BSE at Rs 5.25 as against a 0.33 percent gains on the benchmark.

The Economic Times reported

LM: Bank of Baroda buys ₹3,000 crore DHFL loans

30 June 2019: Bank of Baroda (BoB) has entered into a transaction with Dewan Housing Finance Corp. Ltd (DHFL) to acquire loans worth ₹3,000 crore against its exposure to the non-bank lender, even as a lenders’ consortium to the stressed non-bank lender considers a resolution plan, two people aware of the development said.

BoB acquired the pool of loans made by DHFL and adjusted it against its loans to the non-bank lender, the people said, requesting anonymity. Since the acquired loans are higher-rated assets, the quality of BoB’s loanbook will improve.

“Now DHFL will only act as a collection agent for the bank for these loans. The bank will keep around 85-90% of the repayments to itself and the rest will go to DHFL,” one of them said.

Since BoB had an exposure of close to ₹6,500 crore to DHFL, this will be pared by a little less than ₹3,000 crore, the second person said.

“Securitization of assets often happens, but what is different in this case is that the borrower, instead of using the money for liquidity needs, is using it to cancel future term loan repayments,” a banking analyst said on condition of anonymity.

Purchases of loan pools by banks help inject liquidity into non-bank lenders. Banks often buy loans from shadow lenders comprising securitized retail loans to meet priority sector lending shortfall.

State Bank of India (SBI), the country’s largest lender, has an exposure of about ₹10,000 crore to DHFL, the bank’s chairman, Rajnish Kumar, told shareholders at its annual general meeting in June.

Other lenders to DHFL include Bank of India, Central Bank of India, Andhra Bank, Canara Bank, Punjab National Bank and Corporation Bank.

As of December, the non-bank lender had an outstanding debt of ₹1 trillion, of which 38% was in the form of bank loans, 47% from debt markets and 10% through deposits.

Emails sent to DHFL and BoB seeking comments remained unanswered till press time.

“This transaction has not been done as a consortium, but was only between Bank of Baroda and DHFL,” the second person said.

News agency PTI reported on Friday that lenders would take a call on their exposure to the stressed NBFC sector in the light of the Reserve Bank of India’s 7 June circular, which laid down guidelines for resolution of bad loans. “Resolution of any stressed assets either of NBFC or any other sector will be as per the June 7 guidelines of the RBI,” the report cited Kumar as saying.

On 4 June, DHFL delayed interest payment on non-convertible debentures worth ₹850 crore, following which its credit rating was downgraded to default by rating agencies Crisil and Icra. DHFL subsequently was able to make the interest payment within a seven-day grace period given by the bond holders.

On 25 June, DHFL said in a regulatory filing that it was yet to repay ₹225 crore of the total ₹375 crore worth of commercial paper to 12 investors. Since September, DHFL has met liability obligations of over ₹41,000 crore, it said in the same filing.

Mint reported on 20 June that DHFL sold ₹2,000 crore worth of its loan portfolio to offshore investors in a transaction led by SC Lowy, a banking group based in Hong Kong, citing two people aware of the development.

Since December, it has also sold stakes in several of its strategic assets, including affordable housing arm Aadhar Housing Finance Ltd, educational loan business Avanse and DHFL Pramerica Asset Managers. In January, it sold ₹1,375 crore of wholesale loans to foreign alternative investment management fund Oaktree Capital, which buys distressed loan portfolios at a discount.

As of 31 March, DHFL’s promoters include Wadhawan Global Capital Ltd (37.3%), Aruna Rajeshkumar Wadhawan (0.76%), Dheeraj Rajeshkumar Wadhawan (0.57%) and Kapilkumar Wadhawan (0.57%).

The LiveMint reported

DNA: CBI investigates on what basis banks gave loans to struggling Sterling Group

25 June 2019: The Central Bureau of Investigation (CBI) is investigating officials and examining documents of banks that have lent money to the Sterling Group, which is facing insolvency proceedings over debts of Rs 15,600 crore, Zee Media has reported.

The Banking and Securities Fraud Cell of CBI has been examining documents and questioning officials of the lender banks for eight days. The focus of the CBI’s investigation is to understand on what basis the loans had been sanctioned and if due processes were followed or not.

Many of the banks that lent to the Sterling Group are PSU banks – Andhra Bank, UCO Bank, Union Bank, SBI, Indian Overseas Bank, Allahabad Bank, Bank of Baroda and Bank of India.

The Sterling Group is owned by Nitin Sandesara and his family. The Group owned by Sandesara family, who have fled the country to avoid legal proceedings. Sterling Biotech owes more than Rs 7,500 crore and Sterling SEZ owes over Rs 8,100 crore.

Apart from CBI, Enforcement Directorate is conducting investigation against the Sandesara family. The ED had already moved to the PMLA court and registered a complaint under the recently-enacted Fugitive Economic Offenders Act against Nitin, Chetan and Dipti Sandesara, and Managing Director (MD) Hitesh Patel. Other than Patel, Chetan and Dipti are also MDs of the company.

In March 2019, it was reported that Hitesh Patel was nabbed by the Interpol after a red corner notice (RCN) was issued in his name.

The DNA/Zee News reported

HBL: Facor Alloys enters into one-time settlement with Bank of India

24 June 2019: The board of Facor Alloys on Monday agreed to enter into a one-time settlement with Bank of India, Visakhapatnam, for its total outstanding dues of ₹27.05 crore as on March 31, 2019.

The settlement is towards devolvepment of the Standby Letter of Credit issued as collateral in favour of Bank of India, Jersey, for $10 million borrowings by Facor Minerals (Netherlands) BV, a step-down first-level subsidiary. According to OTS, the cut-back amount of ₹4.42 crore received by BOI up to May 31 has been treated as application money and form part of the OTS proposal; ₹10 crore out of the outstanding amount of ₹21.28 crore will be paid by June 29, and the balance ₹11.28 crore by September 18 on monthly instalments basis.

Shares of Facor Alloys jumped 14 per cent at ₹1.46 on the BSE.

The Hindu BusinessLine reported

ET: Goldman Sachs and SSG in talks to buy RattanIndia bad loans

5 June 2019: Goldman Sachs Group Inc and Asian distressed credit specialist SSG Capital Management are in separate talks to buy about Rs 2,500-3,500 crore worth of bad loans at RattanIndia Power, where lenders are planning to sell a part of their exposure to the debt-laden energy firm in the current round of negotiations.

In September last year, state-run Power Finance Corp (PFC) filed an insolvency plea against Rattan India Power, formerly known as Indiabulls Power, to recover unpaid dues. The company has defaulted on about Rs 20,000 crore of loans. Besides PFC, lenders to Rattan India include State Bank of India, Bank of India, Axis Bank, Bank of Baroda, and IDBI Bank.

There are other contenders for the portfolio besides the two private-equity financiers, two finance industry executives aware of the talks told ET.

“We are negotiating and hope to see some portion of the debt taken over,” said one of the persons cited above. “This would be big relief to the lenders as they are struggling to find a solution for such cases in the energy space.”

Goldman Sachs, SSG and RattanIndia Power didn’t respond to ET’s mailed queries until the publication of this report.

RattanIndia has two under-construction thermal power plants at Nashik and Amravati in Maharashtra.

Financing of power assets and recovery of loans stuck in these projects have become rather challenging after the Supreme Court struck down a crucial central bank order, which had given defaulting companies 180 days to concur on a resolution plan with lenders or face bankruptcy courts for unpaid debt of at least Rs 2,000 crore.

Goldman Sachs has been active of late in India’s special situations space. ET reported on May 29 that Goldman is in talks to buy up to Rs 2,000 crore exposure of the Piramal Group in real-estate firm Lodha Developers, which builds top-end properties in Mumbai and downtown London.

Founded in 2009 by Edwin Wong, Andreas Vourloumis and Shyam Maheshwari, former top Lehman Brothers bankers, SSG manages more than $2 billion across Asia. The firm focuses on assets in China, India and Southeast Asia. SSG is seeking to raise another $2 billion special situations fund to invest across its focused territories in Asia.

Private equity funds and special situation credit specialists are scanning the Indian landscape to buy into one of the world’s largest distressed debt markets. India’s banking sector, dominated by state-run lenders, is seeking to extricate about $210billion stuck in bad loans, the central bank’s recent estimates showed.

“New asset classes, such as Alternative Investment Funds and distressed-asset management, have increasingly gained traction in the Indian market, aided by government regulations and tax breaks,” Bain & Co said in its India Private Equity Report in May.

The Economic Times reported

ET: The tribunal Tuesday directed HDIL to clear Rs 98 crore dues in four weeks to BoI as per the agreed terms or be ready to face the consequences

5 June 2019: The Mumbai bench of the National Company Law Tribunal (NCLT) on Tuesday said the BSE-listed real estate developer will have to pay Rs 98 crore to Bank of India within four weeks. HDIL owes around Rs 520 crore to Bank of India and it had agreed to pay it in tranches.

The company is facing insolvency petitions filed by Bank of India, Corporation Bank and Syndicate Bank among other lenders.

“There was a one-time settlement (OTS) and the firm was supposed to get money from a cooperative bank to repay as per the OTS schedule, but due to the election the bank delayed giving us money,” senior counsel Navroz Seervai told NCLT, appearing for the builder. “There are several lenders and so far, the company has paid about Rs 800 crore to its lenders which shows that the company is genuine. However, the company is now seeking a mere four weeks to pay the dues as per the schedule.”

Rohan Agrawal of MDP & Partners, who represented Bank of India, argued that the first case was filed in 2018 and the company had given an undertaking that it will settle it through OTS. The bank had to file a fresh case because the company had failed to do so, he said. Other public-sector banks including Syndicate Bank (Rs 57 crore), Union Bank of India (Rs 15 crore), Corporation Bank (Rs 7.42 crore) and Dena Bank (Rs 2.75 crore) have filed separate petitions under Section 7 of the Insolvency and Bankruptcy Code (IBC) against HDIL to recover their dues.

After hearing the arguments, the division bench comprising Bhaskara Pantula Mohan and V Nallasenapathy had granted four weeks to HDIL to repay Rs 98 crore to Bank of India and around Rs 10 crore to Syndicate Bank as per schedule. The tribunal has adjourned the case to July 4.

Cases filed by Corporation Bank, Union Bank of India and Dena Bank will be heard on June 26. Last year, the company had settled two similar bankruptcy petitions filed by Jammu & Kashmir Bank and Andhra Bank by paying about Rs 334 crore and around Rs 40 crore, respectively.

An email to HDIL remained unanswered as of press time Tuesday.

The company, known for slum rehabilitation projects in Mumbai so far, has total debt of Rs 1,996.43 crore.

In a recently held an investor conference call, HDIL announced that it has reduced debt this year by 18.3% on a consolidated basis and by 20% on a standalone basis, in line with its guidance.

The Economic Times reported