According to the resolution mechanism laid out by the Reserve Bank of India in its June 7 circular, banks are mandatorily required to sign on the ICA to mark their consent to work on a resolution process between lenders and the defaulter.
It is understood that DHFL, along with key lenders led by Union Bank of India, is in the final stages to wrap up the resolution plan and will be placing it before the consortium of lenders. A resolution committee has been formed by DHFL
for this. As part of the resolution plan, sources said DHFL
would pay individual unsecured creditors fully, which would be followed by secured creditors. However, no final decision has been taken on it.
According to the terms suggested in the resolution plan, the company will get fresh monthly credit lines of Rs 1,000-1,500 crore a month and the tenure of the existing loans may be extended if found suitable. Banks may also convert part of their outstanding into equity capital, if required. Sources, however, say that the total debt likely to be converted into equity may be restricted to 10 per cent.
DHFL had bank loans of Rs 40,600 crore and debt securities of Rs 45,380 crore to be repaid as of March 31, 2019. Its assets stood at Rs 98,000 crore, of which about Rs 35,000 crore is wholesale loans. Over the next two months, DHFL has an interest obligation of Rs 440 crore to meet towards secured lenders (those holding NCDs) against a principal outstanding of Rs 4,770 crore.
Sources added that in the process of resolution, banks might also provide a moratorium of 6-12 months towards the principal loans due for repayment. “If there are other repayment obligations that arise for DHFL during this period such as NCDs, these obligations will be met by the company,” said a senior executive at a public sector bank. In such a case, mutual funds
due for repayment of NCDs need to be repaid on the date of maturity, he added.
With inputs from Jash Kriplani