An appeals court on Wednesday granted interim relief to DLF by allowing the real estate company to redeem mutual fund (MF) investments worth R1,806 crore toward “payment of loan installments inclusive of interest payments”.
The Gurgaon-based realty firm continues to contest the three-year regulatory ban that restrains the company from accessing the capital markets.
The Securities and Appellate Tribunal (SAT) has allowed mutual fund redemption after DLF group chief financial officer (CFO) Ashok Kumar Tyagi submitted a statement giving a detailed break-up of the fund required by the company and its subsidiaries by December 31, 2014.
DLF said it needs to redeem R767 crore worth of MFs in November 2014, of which the company will utilise R350 crore for its own use and the balance R417 crore will be utilised by its subsidiaries. In addition, the company can redeem R1039 crore in December – R750 crore for its own use and R287 crore for the subsidiaries.
DLF has a little over R2,000 crore locked in mutual funds. The company has a more than R20,000 crore in borrowed capital from various financial institutions.
“Without prejudice to their (DLF) rights, the appellant (DLF) be permitted to redeem investments made in the mutual funds to the extent that this tribunal deems fit and proper… In addition, the appellant is required to submit a certificate from the statutory auditors to Sebi that amount received by redemption of mutual funds are utilised for the aforesaid purposes by indicating the name of subsidiary and on whose behalf the money is redeemed,” observed JP Devadhar, tribunal’s presiding officer and head of the three-member bench.
The SAT, a quasi-judicial body, has also stated the regulatory ban will not come in the way of shares of unlisted companies pledged with lenders or pledgee that were suspended by the depositories National Securities Depository (NSDL) and Central Depository Services (CDSL).
“It is made clear that the impugned order will not come in the way of the lenders or plegdee in invoking and enforcing the shares of the unlisted subsidiaries, which held by the appellant but are pledged in favour of the lenders, if and when the need arises,” observed Devadhar.
The three-member bench of the SAT will conduct final hearing on December 10. As part of the appeals process, the tribunal will decide if the company may be allowed to raise R5,000 crore rupees in non-convertible debentures (NCDs).
The tribunal has set November 30 as deadline for market regulator Sebi to file an affidavit on the complete matter. SAT has also set December 8 as deadline for the Gurgaon-based real estate developer to submit its rejoinder against Sebi affidavit, challenging the three-year ban imposed by the market regulator for alleged irregularities in the 2007-IPO through which the company raised R9,187 crore – the biggest public offering in the country at that time.
Sebi barred DLF and six of its top executives from accessing and otherwise buying, selling or dealing in securities for a period of three years for non-disclosure of “material information” in its draft red-herring prospectus (DRHP).