Oaktree sweetens DHFL offer by Rs 1,700 crore

December 25, 2020 2:30 AM

In an email sent to committee of creditors (CoC) just before the scheduled meeting of lenders on Thursday, Oaktree Capital said it would allocate Rs 1,700 crore as additional interest income to financial creditors.

Ajay Piramal, chairman, Piramal Enterprises, had earlier written a letter to DHFL administrator highlighting constraints in the takeover of DHFL’s insurance business by Oaktree.Ajay Piramal, chairman, Piramal Enterprises, had earlier written a letter to DHFL administrator highlighting constraints in the takeover of DHFL’s insurance business by Oaktree.

By Ankur Mishra

Oaktree Capital has increased its offer for Dewan Housing Finance Corporation (DHFL) by Rs 1,700 crore, sources close to development told FE. In an email sent to committee of creditors (CoC) just before the scheduled meeting of lenders on Thursday, Oaktree Capital said it would allocate Rs 1,700 crore as additional interest income to financial creditors. The increase in the offer came after rival bidder Piramal Capital and Housing Finance (PCHFL) offered to increase the interest income by a similar amount.

“In an effort not to gain an unfair advantage, we have allocated an amount of additional interest income to the financial creditors equal to the total increase offered by the second highest bidder for the additional interest income and the insurance stake, so that the bids may once again be compared on a consistent basis,” the email sent to the CoC said.

With this offer, Oaktree Capital claimed its total bid for DHFL was at Rs 38,400 crore. The American asset management firm also said its offer for DHFL was Rs 1,150 crore more than Piramal’s bid. Similarly, on a net present value (NPV) basis, Oaktree claimed its offer to be higher by Rs 1,501 crore than the rival bidder. Oaktree Capital, PCHFL and Adani Properties had earlier submitted bids in the latest round for the entire book of DHFL.

Oaktree Capital also said it had addressed concerns raised by lenders in its latest resolution plan submitted on December 22. It clarified that Oaktree’s bid is completely unconditional, barring National Company Law Tribunal (NCLT) and regulatory approvals.

Similarly, incremental amount of Rs 300 crore has been provided to fixed deposit (FD) holders as a ‘goodwill gesture’. Oaktree has also claimed risk-free implementation of stake sale in the insurance arm of DHFL. “Detailed execution plan explained in the plan for the insurance stake, offers high certainty of execution for the CoC,” Oaktree Capital said.

Ajay Piramal, chairman, Piramal Enterprises, had earlier written a letter to DHFL administrator highlighting constraints in the takeover of DHFL’s insurance business by Oaktree. Piramal said competing foreign financial investor’s resolution plan is unimplementable till such time that a credible, regulatorily acceptable alternate buyer for the insurance business emerges. Currently, 49% of DHFL Pramerica Life Insurance is owned as foreign investment by Prudential International Insurance Holdings.

DHFL is undergoing insolvency proceedings at the NCLT Mumbai since December 3. The admitted claims of the troubled lender stood at Rs 87,120 crore as on September 10,2020. State Bank of India is the lead creditor with claims of Rs 10,083 crore.

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