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DHFL lenders may name SBI Cap as advisor

Out of the total debt owed by the company, around 40 per cent of Rs 40,000 crore is estimated to be bank loans.

, ET Bureau|
Jul 04, 2019, 07.41 AM IST
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Mumbai: Lenders to the troubled non-bank lender Dewan Housing Finance Corporation Limited (DHFL) are considering appointing investment bank SBI Capital Markets as advisors as they look to restructure loans to bail out the company, two bankers familiar with the development told ET.

On the table is rescheduling of loans, a possible debt to equity conversion and a strategic sale of assets, people familiar with the plans said. Banks are set to meet on Friday to sign an inter creditor agreement for the account. “There is a proposal to bring SBI Caps on board. Though an official decision has not been made yet, the talks are veering in that direction,” said a person familiar with the ongoing discussions. “We are also considering if a fresh liquidity support can get them back on track.”

Mortgage lender DHFL faced repayment pressures after a credit crisis hit the non-bank finance sector as fallout of the Infrastructure Leasing & Financial Services crisis. The company recently informed exchanges that due to unforeseen operational engagements it would announce its fourth quarter results for fiscal year 2019 on July 13.

ET had earlier reported that lenders had agreed to sign an inter creditor agreement (ICA) and consider a resolution plan to rescue DHFL, which has an outstanding debt of over Rs 1 lakh crore. Under the new stressed asset resolution mandate issued by the RBI on June 7, it is mandatory to sign an ICA for implementation of any revival plan. Lenders are now considering extending tenure of the current loans and convert short-term credit to longer tenure debt.
dhfl-graph

“There could be a plan to reschedule the loans which could mean an increase in the tenure of the loans which will help bring down the monthly instalments. Most loans from banks are term loans so it is likely that the long tenure five-year loans could be extended to seven years. The tenure on the short-term cash credits could also be converted to a term loan,” said a banker familiar with the discussions. As per official details available till December 2018, DHFL had of Rs 1.26 lakh crore assets under management, 57 per cent of the portfolio was retail, 21 per cent was loan against property, 17 per cent was project finance and the remaining were to the MSME sector. Its liabilities were nearly Rs 1 lakh crore, since then the company has sold some part of its portfolio.

Out of the total debt owed by the company, around 40 per cent of Rs 40,000 crore is estimated to be bank loans. DHFL borrowed close to 50 per cent of its debt from market borrowings like non-convertible debentures (NCDs). SBI has the largest exposure with Rs 10,000 crore. DHFL has not yet defaulted on paying back loans to any of the lenders. Last month, it defaulted on Rs 375 crore of commercial papers, a part of which is still unpaid.

It also missed nearly Rs 1,000 crore on interest payments on NCDs sold a year ago, which was subsequently paid back. Banks, however, say the action is a pre-emptive one to ensure that the NBFC does not eventually default.
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