DHFL to Call for Fresh Bids After Witnessing Adani's Unexpected Offer
CEOInsights Team, 0
DHFL received bids from resolution applicants that include Adani Group, Piramal Group, Oaktree and SC Lowy. In a sudden move, Adani decided to bid Rs. 250 crore more than Oaktree for the entire firm. To this, Piramal and Oaktree have objected and the former has written a letter to the creditors of DHFL, including State Bank of India, according to the person cited above.
“Piramal has written to SBI saying that it will take legal recourse if Adani’s bid is accepted. To avoid any legal battle or delay in the sale process, the committee of creditors (CoC) will reopen the stage for final bidding, allowing any bidder to join and place their fresh bids or revise their bids for acquiring DHFL," said one of the two people. The decision of the CoC to reopen the bids for DHFL follows Piramal’s letter to SBI.
As of now, Adani’s bid is the highest, trumping that of Oaktree and Piramal. While Oaktree had submitted a bid of Rs. 31,000 crore for the entire company, the Piramal Group had bid Rs. 25,000 crore for DHFL’s retail bid. Lenders had asked the bidders to revise the bids and submit fresh ones as they found the prices to be very low.
In its letter, the Piramal Group said the submission of a resolution plan, after the submission date, is neither in accordance with the provision of the revised request for resolution plan dated 16 September 2016 (RFRP) nor the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, (CIRP Regulations).
To avoid any legal battle or delay in the sale process, the committee of creditors (CoC) will reopen the stage for final bidding, allowing any bidder to join and place their fresh bids or revise their bids for acquiring DHFL
It added that since the unsolicited offer has not been submitted in accordance with the provisions of the RFRP and the IBC, “we would urge the Administrator and the CoC to disregard such an offer and continue with the corporate insolvency resolution process as prescribed under the RFRP without any deviations from it. We hereby reserve all our rights under law and equity to seek appropriate redressal, including withdrawing from the current corporate insolvency process for DHFL, if the unsolicited offer of the Offeree is considered and/or the process set out the RFRP, the IBC and the CIRP Regulations is not duly followed”.
DHFL had total assets of Rs. 93,000 crore, comprising retail asset portfolio of Rs. 33,000 crore, wholesale asset portfolio of Rs. 48,000 crore, and cash and cash equivalent of Rs. 12,000 crore. The Adanis initially offered to pay Rs. 750 crore within one year and the balance Rs. 1,500 crore would be payable after eight years. Piramal Enterprises bid for DHFL’s retail portfolio was only Rs. 6,000 crore. Piramal also offered Rs. 9,000 crore of Rs. 12,000 crore available with DHFL to the lenders. The Piramal bid would result in recovery of only around 6 percent for lenders. SC Lowy submitted a bid that comes with so many conditions that it is unlikely to be considered.
Meanwhile, it is understood that in its current form, the Adani bid is the most favourable. “Lenders will opt for a sound proposal with less haircut. Banks want to recover the maximum amount from their exposure. Why should they adjust the cash of around Rs. 10,000 crore or Rs. 12,000 crore lying DHFL against the EMI or repayment,” said a banking source. While Adani Capital has been looking to expand organically over the last 2-3 years and opened around 100 branches, it is now looking to expand inorganically and expand its presence in the NBFC sector. According to a source, DHFL’s acquisition would provide synergy to Adani Group’s NBFC business and the group is keen on acquiring it.