Stressed US-based asset buyer Oaktree Capital Management proposes to offer more money to Dewan Housing Finance Corp.’s financial creditors as the bidding war intensifies.
Oaktree Capital proposed to increase its down payment for the beleaguered home finance company by another Rs 1.7 billion, according to two people with direct knowledge of the development who did not want to be identified as details are not yet public. The investor also offered to pay another Rs 300 crore to the fixed deposit holders, the people said.
The 1.7 billion rupees will be paid from the additional interest income that DHFL will accumulate from its existing loan book until the resolution process is complete and Oaktree Capital can take over the home finance company.
That comes after the international investor agreed to remove the terms of its December 14 offer. It is competing with Piramal Enterprises Ltd. and Adani Group for the distressed mortgage lender.
In its previous offering, Oaktree Capital said it would place Rs 1,500 crore in an escrow account and transfer the funds after paying any fees associated with the sale of the DHFL group life insurance company. After the lenders objected, the stressed asset investor agreed to add this amount to the down payment to financial creditors.
The latest changes brought Oaktree Capital’s total offering to more than Rs 38,000 crore, the people cited above said. That includes an advance payment and seven-year non-convertible bonds worth Rs 21 billion that Oaktree Capital will issue to financial creditors.
Piramal Enterprises, the other bidder actively involved in the DHFL sale, proposed to pay Rs 1,700 crore of additional interest income, the people quoted above said. The total bid from the Ajay Piramal-owned bidder to DHFL amounts to more than Rs 37 billion. It includes a value of Rs 19,550 million in 10-year non-convertible bonds and Rs 150 million to be paid to holders of fixed deposits.
Apart from the two, Adani Group is also in the running, but has yet to review its payment plan, the people said.
DHFL’s offers have been the subject of multiple reviews by potential buyers after Adani Group materially changed its offering in November. He proposed to buy the entire DHFL loan book, rather than the wholesale loans as he had originally stated. This led to complaints from other bidders, notably Piramal Group, which raised a formal protest in a letter to creditors on November 15.
To avoid any litigation, financial creditors allowed all bidders to review their bids without imposing restrictions on the type of assets for which they were seeking to bid.
The offers will be voted on by the creditors committee after assigning scores, depending on the merits of the offer. In addition to the value of the prepayment, the scoring model will also consider the nature of the securities issued to creditors, the net present value of the account, and what bidders plan to do with the business after they have purchased it.
BloombergQuint expects responses to inquiries emailed Thursday to the Reserve Bank of India appointed trustee at DHFL, lead lender State Bank of India, Oaktree Capital and Piramal Group.
DHFL owes financial creditors more than Rs 87 billion, according to the home finance company’s website. Insolvency proceedings initiated in November 2019 have experienced considerable delays due to the Covid-19 pandemic.
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