DHFL floats draft resolution plan; proposes conversion of debt into equity

Debt-ridden mortgage lender DHFL floated a draft resolution plan under which it proposes to convert debt into equity, subject to approval of investors and bankers.

The Wadhawan family, who owns a little over 39 per cent in the company, has been looking at various ways of coming out of the stress which first came to light late last year following the IL&FS bankruptcy. These include selling stakes in group entities, including in the flagship to the extent of giving up half of their stake.

The company on September 27 held a meeting to present the Draft Resolution Plan to all its institutional creditors including banks, financial institutions, mutual funds, insurance companies and other institutional bond holders, and to apprise them of the various steps required to be undertaken to implement the Resolution Plan, DHFL said in a filing to stock exchanges on Saturday.

Assuming a price of Rs 54 per share for debt conversion into equity by lenders to acquire 51 per cent in the company, it said.

This proposed Resolution Plan, including all projections, cash flows, computation of liabilities, etc. are based on reports received from various consultants appointed by the lenders and the company, it said.

The cash flow projections factored for the proposed Resolution Plan do not take into account any tax impact that may occur, in the hands of the borrowers, it said.

The repayment or restructuring of terms of public deposits is under discussion with relevant stakeholders and regulators and may be subject to amendment, it added.