You are here: Home » Companies » News
Business Standard

DHFL bid: Sebi asks Oaktree Capital to explain credit rating claims

As per norms, credit rating agencies cannot indicate a rating of an instrument unless such a rating is given. Such action is barred as it could potentially mislead investors.

Topics
DHFL | SEBI

Press Trust of India  |  New Delhi 

DHFL
The Securities and Exchange Board of India (Sebi) asked DHFL's administrator to furnish the details of CRAs and the ratings.

As the insolvency resolution enters its final phase, markets regulator has asked the mortgage firm's administrator to explain the claim by a suitor about credit rating of a proposed debt instrument, sources said.

The US-based Oaktree Capital in its bid claimed that post resolution, DHFL's NCDs would be assigned an AAA rating if their resolution plan is accepted, they said.

As per norms, credit rating agencies cannot indicate a rating of an instrument unless such a rating is given. Such action is barred as it could potentially mislead investors.

In a letter dated January 5, said it has received complaint against unnamed Credit Rating Agencies (CRAs) that have allegedly offered their views to a potential issuer or bidder, Oaktree Capital on a future rating of resolution plan and instruments which is in violation of regulation.

The Securities and Exchange Board of India (Sebi) asked DHFL's administrator to furnish the details of CRAs and the ratings.

Since the conclusion of the fifth round of the bidding last month, Oaktree and Piramal Enterprises are claiming that their bid is highest and implementable.

According to the sources, suitors have submitted bids in the range of Rs 35,000-37,000 crore.

Oaktree had said its revised bid for debt-ridden is unconditional and comes with a commitment of fresh capital infusion of Rs 1,000 crore for the revival of the company.

However, Piramal Enterprises claimed it is offering higher upfront cash and has higher Net Present Value (NPV). Besides, it has got highest score on the CoC-mandated scorecard and the bid is fully compliant.

Moreover, Piramal said it is an Indian company, with strong ties with the Indian society, and over Rs 30,000 crore of equity is invested in the country right now.

The Committee of Creditors (CoC) is likely to take a call on the successful suitors on January 14 by examining bid details including qualitative and quantitative parameters.

In November 2019, the Reserve Bank referred Dewan Housing Finance Ltd (DHFL), the third-largest pure-play mortgage lender, to the National Company Law Tribunal (NCLT) for insolvency proceedings.

DHFL was the first finance company to be referred to NCLT by the RBI using special powers under Section 227 of the IBC.

Prior to that, the company's board was superseded and R Subramaniakumar was appointed as the administrator. He is also the resolution professional under the Insolvency and Bankruptcy Code (IBC).

As of July 2019, the company owed Rs 83,873 crore to banks, the National Housing Board, mutual funds and bondholders.

Insolvency proceedings on DHFL began on November 15, 2019, with the government enabling the Reserve Bank to send large financial services companies, excluding banks, to NCLT for insolvency proceedings.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, January 08 2021. 22:25 IST
RECOMMENDED FOR YOU
.