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DHFL lenders may seek promoters shares to extend credit

MUMBAI: Banks will provide further loans to Dewan Housing Fi..

MUMBAI: Banks will provide further loans to Dewan Housing Finance (DHFL) only if promoters of the embattled home financier were to pledge their shares as collateral, said three people familiar with the matter. DHFL is seeking fresh credit from banks.

“Fresh funding from lenders will depend on pledging of shares,” said one of the persons cited above. Pledged shares, called non-disposal undertaking (NDU) in market parlance, will only be released when promoters use the proceeds from stake sales in subsidiaries to begin outstanding repayments, the person said.

Bankers and bond holders of DHFL are scheduled to meet Thursday to create a resolution roadmap for more than Rs 1 lakh crore of loans under stress.

NDUs are signed usually by the debtor in favour of the lender in relation to any loan obligation by the borrower. An NDU helps in ensuring that the debtor does not transfer the shares held by it until the execution of a restructuring plan.

“The home financier would submit a debt restructuring plan even as banks are set to meet on Thursday,” one of the persons cited above told ET.

DHFL didnt comment.

On Thursday, lenders are set to ink an Inter-Creditor agreement (ICA) that would consider the debt restructuring plan. Banks are said to have met a group of institutional investors on Wednesday, informing them about the overall restructuring plan, said a senior executive with direct knowledge of the matter. These investors include sovereign funds.

DHFL has to pay back Rs 7,000 crore in the next two months on maturing bonds and due interest.

About three months ago, DHFL sold 80% in Avanse Financial Services, its education finance arm, to US private equity major Warburg Pincus.

The sale proceeds, estimated at Rs 1,200 crore, are expected next week. Both DHFL and WGC, the holding company, will share the proceeds between them. The Wadhawan famRead More – Source

ET Markets