The total consideration of Rs 34,250 crore includes advance cash payment of about Rs 14,700 crore and issuance of debt instruments of about Rs 19,550 crore (10-year NCDs @ 6.75% p.a. on half yearly basis).
In the biggest recovery of stressed assets, banks will get a mix of cash and NCDs in the DHFL insolvency resolution case.
This is the first successful resolution under the IBC route in the financial services sector and one of the largest resolutions in terms of value.
The recovery will help banks improve their bottomline.
Here’s the outline of the deal:
DHFL’s creditors (including FD holders) will recover a total of Rs 38,000 crore from the resolution process of DHFL.
This amount includes:
(i) Rs. 34,250 crore to be paid by PCHFL in the form of a combination of cash and non-convertible debentures and
(ii) ~ Amount of Rs. 3,800 crore, which the creditors are entitled to (as per the resolution plan) from the cash balance available with DHFL.
About 94% of the creditors voted in favor of Piramal’s resolution plan. According to regulatory filings, most DHFL creditors will recover around 46% through acquisition Piramal Group.
The resulting unit will be called PCHFL.
“We are very pleased to announce Idea Payments made to complete this exciting acquisition. It accelerates our plans to become a leading digitally oriented, diversified financial services conglomerate that serves our nation’s most underserved and underserved.” A key feature of any advanced economy is a strong insolvency code. Ajay Piramal, Chairman, Piramal Group, said, “Historic reforms of bankruptcy have made such complex resolutions more complete and made it possible to resolve in a time bound manner.”
“The merged entity combines Piramal’s financial strength, core values and institutional credibility with DHFL’s geographic footprint and distribution network of 301 branches and 2,338 employees catering to ~1 million lifetime customers across 24 states – making it the nation’s leading Housing Finance is one of the companies,” Piramal Group said in the regulatory filing.