The Committee of Creditors (CoC), the body of lenders to the beleaguered housing finance company DHFL is reportedly considering easing the norms they had set for the buyers of the assets of the company. The lenders had earlier fixed a minimum level of assets under management (AUM) of Rs 12,000 crore for any entity interested in buying DHFL’s assets. This is now being sought to be lowered to Rs 10,000 crore.
Similarly, the level of committed funds may be brought down from Rs 5,000 crore to Rs 3,500 crore. The minimum threshold limit for net worth of the bidders will also be brought down from Rs 5,000 crore to Rs 3,500 crore.
This information on the lenders taking this up for consideration has come through some sources and not directly from official sources. The perception among the lenders is fixing very rigid norms for the bidders to participate in the process may scare away genuine bidders though they may well be capable of taking over the assets of DHFL.
The company is currently being managed by an administrator appointed by the Reserve Bank of India. The first set of figures were proposed to the lenders by this administrator. It has been reported that the adviser to the process, retained by the lenders, SBI Capital Markets Ltd have also tendered their opinion on similar lines.
This may be the general learning from the Jet Airways (India) Ltd case at the NCLT. There were very few bidders and those who bid also did not follow through.
In a deal of this sort a situation where there are more bidders the seller will have a better bargaining power to squeeze out a more favourable price. With few bidders and so many stipulations it can limit the scope for such negotiations.
The CoC will have the full discretion to vote on such matters. After all, it is their money that is stuck with the defaulting company, in this case DHFL and whatever maximum they can recover out of the outstanding dues will be to their benefit.
DHFL is the first non-bank lender to be referred to NCLT under new rules notified by the government on 15 November. Immediately thereafter, RBI referred DHFL, to the NCLT.
DHFL’s Administrator R. Subramaniakumar has decided to segregate DHFL’s loan book into three groups: retail assets, investments and unsecured loans in one group; construction finance loans, mortgage loans, corporate loans, intercorporate deposits and pass-through certificates in the second; and loans to entities for Slum Rehabilitation Authority (SRA), Mumbai projects.
Meanwhile, a claim of Rs 4,100 crore by Prudential International Insurance Holdings Ltd stood rejected for lack of documentary proof supporting the claim. The total amount verified by the administrator was Rs 86,035 crore, of which Rs 5,015 crore was towards 60,717 fixed deposit holders.