Race to acquire DHFL: Voting on resolution plans ends tomorrow

The creditors' committee will conclude voting on all resolution plans for Dewan Housing Finance Limited (DHFL) by Friday afternoon, after an intense bidding war between the suitors and multiple rounds of bidding.

Four people in the know told CNBC-TV18 that voting will conclude on January 15, a day later than initially expected. “Unlike in past IBC cases, banks don’t have the deciding vote here. NCD holders control over 50 percent of votes, and public sector banks about 28 percent,” said a senior banker from one of the large lenders of DHFL. This person added that it is tough to pre-empt which plan the bondholders would prefer. The other private banks, masala bondholders and Fixed Deposit (FD) holders control the remaining votes.

“I can speak for most retail NCD shareholders in saying there is no clarity on the choices and consequences of voting…It is very likely that most small NCD/FD holders will abstain because they are not able to understand the proposals. So it comes down to banks and institutional NCD holders,” said a retail bondholder of DHFL.

CNBC-TV18 had reported earlier that the race to acquire DHFL had narrowed down to two suitors- Ajay Piramal led Piramal Group and US-based distressed asset fund Oaktree Capital. Oaktree Capital offered the highest offer overall at Rs 38,400 crores for the entire book, whereas Piramal Group offered Rs 37,250 crores, CNBC-TVV18 reported earlier.

However, the fine print of the bids may sway the votes and not just the overall offers. Piramal Group offers easier terms for the takeover of DHFL’s insurance businesses versus Oaktree Capital, which has to contend with 49 percent FDI restriction. Piramal Group has also offered more cash upfront. Oaktree, however, has offered a shorter repayment window.

To be declared the winning bidder, the resolution applicants have to secure a minimum of 66 percent of the votes. The resolution plan with the highest vote, subject to a minimum of 66 percent votes, will be declared the winning bidder.

“You can anyone – bankers, lawyers, suitors involved- this case will not end with the CoC voting. It will end up in the courts, irrespective of which way the vote goes,” said another public sector banker on the condition of anonymity.

DHFL is the first financial services company to be sent to NCLT under IBC, and is facing claims of Rs 87,031 crore from financial creditors led by SBI, Union Bank of India and others.

(sources)