India’s crisis-hit shadow bank Dewan Housing Finance (DHFL) has submitted a draft resolution plan proposing to convert debt to equity while seeking to sell assets and raise more capital.
DHFL, the country’s fourth-biggest housing finance company, has roughly Rs 1 trillion ($14.15 billion) of debt, and owes about Rs 400 billion to banks alone. The company has defaulted on its obligations several times.
The company held a meeting on September 27 to present the Draft Resolution Plan to its lenders and to inform them of the steps required to implement it, the firm said in a release on September 28.
The company now proposes that 2.3 percent of each category of lenders’ debt exposure to it will be converted into equity at an assumed price of Rs 54 per equity share.
The draft resolution plan will be subject to approval of investors and lenders.
Whether lenders agree to the conversion price needs to be seen as shares in the company closed at Rs 42.25 on September 27.
The mortgage lender has been looking at various ways to emerge from the stress which first came to light in September last year following the collapse of infrastructure lending behemoth Infrastructure Leasing and Financial Services.
The company has looked at selling stakes in group entities, including in the flagship.
Following the debt conversion, lenders’ will acquire a 51 percent stake in DHFL.