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Wednesday, December 02, 2020

DHFL resolution: Amid protest over bid by Adani, CoC to take call on all 4 offers

Piramal Group had written to the lenders protesting against Adani Group’s offer, placed after the Nov 9 submission date.

By: ENS Economic Bureau | Mumbai, New Delhi | November 17, 2020 3:37:11 am
CoC defers decision on DHFL takeover, to take call after December 3

The Committee of creditors (CoC) of scam-hit Dewan Housing Finance Corporation (DHFL) is set to meet over the next couple of days to decide on the four bids received from resolution applicants, that include Adani Group, Piramal Group, Oaktree and SC Lowy.

Among those received, while Adani Group placed a bid of more than Rs 31,000 crore for all assets of DHFL, the bid had raised eyebrows and Piramal Group wrote a letter to the CoC protesting against Adani’s offer which was submitted after November 9, the submission date for the resolution plan.

As of now, Adani’s bid is the highest, trumping that of Oaktree and Piramal. While Oaktree had submitted a bid of Rs 31,000 crore for the entire company, the Piramal Group had bid Rs 25,000 crore for DHFL’s retail bid. Lenders had asked the bidders to revise the bids and submit fresh ones as they found the prices to be very low.

In its letter, the Piramal Group said the submission of a resolution plan,after the submission date, is neither in accordance with the provision of the revised request for resolution plan dated 16 September 2016 (RFRP) nor the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, (CIRP Regulations).

It added that since the unsolicited offer has not been submitted in accordance with the provisions of the RFRP and the IBC, “we would urge the Administrator and the CoC to disregard such an offer and continue with the corporate insolvency resolution process as prescribed under the RFRP without any deviations from it. We hereby reserve all our rights under law and equity to seek appropriate redressal, including withdrawing from the current corporate insolvency process for DHFL, if the unsolicited offer of the Offeree is considered and/or the process set out the RFRP, the IBC and the CIRP Regulations is not duly followed.”

When contacted, an Adani Group spokesperson declined to comment on the matter.

DHFL had total assets of Rs 93,000 crore, comprising retail asset portfolio of Rs 33,000 crore, wholesale asset portfolio of Rs 48,000 crore, and cash and cash equivalent of Rs 12,000 crore. The Adanis initially offered to pay Rs 750 crore within one year and the balance Rs 1,500 crore would be payable after eight years. Piramal Enterprises bid for DHFL’s retail portfolio was only Rs 6,000 crore. Piramal also offered Rs 9,000 crore of Rs 12,000 crore available with DHFL to the lenders. The Piramal bid would result in recovery of only around 6 per cent for lenders. SC Lowy submitted a bid that comes with so many conditions that it is unlikely to be considered.

Meanwhile, it is understood that in its current form, the Adani bid is the most favourable. “Lenders will opt for a sound proposal with less haircut. Banks want to recover the maximum amount from their exposure. Why should they adjust the cash of around Rs 10,000 crore or Rs 12,000 crore lying DHFL against the EMI or repayment,” said a banking source.

Sources say that while Adani Capital has been looking to expand organically over the last 2-3 years and opened around 100 branches, it is now looking to expand inorganically and expand its presence in the NBFC sector. A source said DHFL’s acquisition would provide synergy to Adani Group’s NBFC business and the group is keen on acquiring it.

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