DHFL may issue new 10-year bonds in lieu of existing debt

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Updated: September 28, 2019 6:56:32 AM

The company had made part payments of Rs 60 crore on June 25, 2019 and Rs 15 crore on June 28, 2019.

The fund houses will get four sets of bonds that are mapped against these loans.” He also added that these new bonds will be for 10 years at a coupon of 8.5%.

Stressed financier Dewan Housing Finance Corporation (DHFL) met all the institutional lenders on Friday to discuss the draft resolution plan (RP). While the bank expects the resolution plan to be implemented next week, sources in the the mutual fund industry told FE that DHFL has proposed to issue new 10-year bonds in lieu of existing debt. There will be no haircuts but the tenure will be much longer.
A fund manager said, “It was a discussion on the provisional RP and how they plan to repay money to creditors. DHFL is saying that there will be four segments such as retail loans, project loans, SRA projects along with other large development loans.

The fund houses will get four sets of bonds that are mapped against these loans.” He also added that these new bonds will be for 10 years at a coupon of 8.5%.

On Wednesday, DHFL had conducted a meeting with its bank lenders to discuss the draft resolution plan. Most of the mutual funds say that they can’t go ahead with the inter-creditor agreement (ICA) and have an option open to go for litigation if they disagree with the draft RP.

Officials from Catalyst Trusteeship, part of today’s meeting, said, “We were invited to today’s meeting and a representative from the organisation did attend as a representative for series where there was sufficient investor approval to accede to the ICA. As for the DRT proceedings, we are in the process of preparing the paperwork on three public issuances.”

In the past at least two fund houses — DSP Mutual Fund and IDBI Mutual Fund — had initiated legal proceedings against the DHFL. DSP Mutual Fund had an exposure of Rs 150 crore to commercial papers (CPs) issued by DHFL with scheduled maturity on June 25, 2019. The company had made part payments of Rs 60 crore on June 25, 2019 and Rs 15 crore on June 28, 2019. On September 7, 2019, DHFL had paid the balance amount of Rs 75 crore; resulting in complete recovery for the CPs held by various schemes of DSP Mutual Fund. IDBI MF also got its balance CPs amount of Rs 12.5 crore from DHFL.

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