Not a penny to equity holders as DHFL bidders value firm's shares at zero

Investors baffled as DHFL had a market valuation of Rs 941 cr on Monday, with its stock trading at Rs 30 a share even after the company was sent for bankruptcy proceedings

All the three bidders of DHFL--Oaktree, Piramal and the Adani group--have valued the housing finance company’s share at zero, leaving no upside to its shareholders when the company will be offered to the highest bidder by January 14th.

As on Monday, DHFL had a market valuation of Rs 941 crore as its share traded at Rs 30 a share even after the company was sent for bankruptcy proceedings thus baffling investors. “As soon as the offer of any bidder is accepted by the lenders, shareholders will not get a single penny. Hence, the Rs 941 crore market valuation of DHFL is a mystery," said a source close to the development.

In several other insolvency cases, the shareholders did not receive any value, he said. The DHFL stock, however, has come down from its 52-week high of Rs 42 reported on December 11.

 

The lenders are currently voting on the three proposals and the results will be known by January 14. While Oaktree has offered Rs 38,400 crore to the lenders as deferred payments and upfront cash of Rs 11,400 crore, Piramal has offered more upfront cash of Rs 12,250 crore. The upfront cash has been offered to the lenders from the Rs 12,000 crore cash already in the books of DHFL. Piramal also plans to make a fresh capital infusion for improving operations and enhancing the operations of DHFL of Rs 3,800 crore in the first one year of post-implementation of the resolution plan. Oaktree has also made an offer of Rs 1,000 crore into DHFL as fresh equity infusion. Piramal has also offered to merge DHFL with its financial services arm thus putting its Rs 10,000 crore of equity investment in its financial services business in the merged entity.

Apart from the lenders, the resolution plans also take care of the fixed deposit holders and its employees but equity holders will get nothing.

"This is not a surprise. Very few bidders have ascribed any value to the shares of bankrupt companies and preferred to take the companies private like Bhushan Steel and Binani Cements. The new owner may list the shares once the integration takes place and the operations stabilise,’’ the source said.

The lenders of DHFL have made claims of Rs 90,000 crore against the company. Of this, State Bank of India has the largest exposure of Rs 10,000 crore.