Piramal warchest. Piramal ties up funds from Barclays Bank, Standard Chartered for DHFL buy

Surabhi Updated - June 14, 2021 at 11:33 AM.

Gets support letter from banks for ₹13,500 crore

FILE PHOTO: A woman walks past a signboard of Dewan Housing Finance Corporation Ltd. (DHFL) outside its office on the outskirts of Mumbai, India, January 31, 2019. REUTERS/Francis Mascarenhas/File Photo

The Piramal Group has already tied up for the capital required for the ₹37,250-crore resolution plan of Dewan Housing Finance Corporation Ltd (DHFL) and is unlikely to require more funds.

The Piramal Group has a cash balance of about ₹5,400 crore as per its balance sheet as on March 31, 2021.

It has also obtained a support letter from Barclays Bank in October last year for ₹4,500 crore and has a commitment letter from Standard Chartered Bank for ₹9,000 crore apart from ₹1,500 crore from the sponsor.

“...therefore, the source of funds is tied up and the Committee of Creditors consisting of 77 members have analysed the same and approved the plan,” the Mumbai Bench of the National Company Law Tribunal (NCLT) said in its order while approving the resolution plan submitted by Piramal Capital and Housing Finance Ltd for DHFL.

Resolution plan

The resolution plan includes upfront cash recovery of ₹14,700 crore, an entitlement of ₹3,000 crore and debt securities of ₹19,500 crore, which will be paid over a 10-year period.

The NCLT in its order also noted that the lead senior counsel confirmed that of the total consideration of ₹37,250 crore, an amount of ₹14,700 crore is upfront payment/cash recovery out of which ₹4,002 crore is brought in by PCHFL and balance ₹10,968 crore is cash balance available with the corporate debtor or DHFL as on April 31, 2021.

Sources also indicated to BusinessLine that the Piramal Group may not require additional cash to fund the acquisition.

“The upfront cash amount has to be paid and the NCDs need to be created,” said the source.

In March this year, PCHFL also raised ₹4,050 crore through issuance of long-term, five-year NCDs in two tranches.

In its order, the NCLT has also directed DHFL Sales and Services to provide manpower services to the corporate debtor for at least one year.

“As prayed by the resolution applicant, since approximately 80 per cent of workforce is from the sister concern of DHFL, namely DHFL Sales and Services Ltd, we direct DSSL to continue to provide manpower services to the corporate debtor as per the existing terms and conditions at least for a year or till the expiry of the contract period whichever is later and notice period for termination should be at least six months by either side,” it said.

Status of debtor

The NCLT further said that while granting No Objection Certificate by the Reserve Bank of India, the status of the corporate debtor is changed from deposit taking housing finance company to non-deposit taking housing finance company.

“On reverse merger of the successful resolution applicant PCHFL into and with DHFL, the corporate debtor is prima facie approved by this Adjudicating Authority,” it further said.

Also read p2

Published on June 13, 2021 16:04