As part of a debt settlement plan, the lenders to Dewan Housing Finance Corp. Ltd (DHFL) are set to declare 65% of loans outstanding to DHFL as unsustainable.A total Rs. 24,700 crore is the portion of loans that DHFL can’t service through its cash flows. Out of this, Rs. 760 crore will be converted into equity, while Rs. 8,740 crore will be recast into unsecured debt that won’t generate...
As part of a debt settlement plan, the lenders to Dewan Housing Finance Corp. Ltd (DHFL) are set to declare 65% of loans outstanding to DHFL as unsustainable.
A total Rs. 24,700 crore is the portion of loans that DHFL can’t service through its cash flows. Out of this, Rs. 760 crore will be converted into equity, while Rs. 8,740 crore will be recast into unsecured debt that won’t generate any interest payments. The remainder Rs. 15,200 crore of unsustainable debt will be converted into 10-year non-convertible debentures with a coupon rate of 6% and will be allocated to its lenders.
DHFL was one of the worst-hit by the crisis faced by non-bank lenders after Infrastructure Leasing and Financial Services Ltd (IL & FS) defaulted on payments last year. The defaults increased the cost of funds and made it tougher for the shadow lender to borrow from banks and the bond market.
Lenders to DHFL plan to infuse fresh funds of Rs. 500 crore every month for six months into DHFL to help restart its retail lending business. The resolution plan is under discussion.
The list of lenders to DHFL comprise of consortium of Union Bank of India, Bank of India, Central Bank of India, Andhra Bank, Canara Bank, Punjab National Bank and Corporation Bank.