Mumbai: Stressed mortgage lender Dewan Housing Finance Corp Ltd (DHFL) on Friday said its board approved conversion of whole or part of its debt into equity shares even as the resolution plan was being worked out by lenders.
“(The board has approved) conversion of the whole or part of the debt into equity shares or other securities of the company in accordance with the applicable law with the price of such conversion being in line with the applicable laws and which may result in a change in ownership of the company,” it said.
DHFL also said the board approved an increase in the authorized share capital of the company from ?828 crore to ?1,090.39 crore.
Earlier this month, DHFL said its draft resolution plan submitted to lenders spares creditors from having to take haircuts on principal payments. Lenders are currently preparing the resolution plan under the Reserve Bank of India’s (RBI) 7 June circular on resolution of stressed assets. According to the RBI’s 7 June circular, 75% of lenders by value of the total outstanding credit facilities to a stressed company and 60% by number must agree for an inter-creditor agreement to be binding on all lenders.
State Bank of India has an exposure of around ?10,000 crore to DHFL, the bank’s chairman Rajnish Kumar told shareholders at its annual general meeting in June. Other lenders to DHFL include Bank of India, Central Bank of India, Andhra Bank, Canara Bank, Punjab National Bank and Corporation Bank.
As of December, DHFL had an outstanding debt of ?1 trillion, of which 38% was in the form of bank loans, 47% from debt markets and 10% through deposits.
News Source: livemint