Cash-strapped Dewan Housing Finance Corp. is in discussions with its bondholders to revamp its debt as the Indian mortgage lender tries to shore up its financials after posting its first quarterly loss in more than a decade.
In a meeting with its rupee bondholders last week, Dewan Housing discussed an inter-creditor agreement that the consortium of bankers has agreed to enter for a potential restructuring of its liabilities, according to three people familiar with the matter. The company also discussed the impact of the agreement on its bond investors, and highlighted that as part of the resolution plan, maturities of several bonds may be elongated and/or interest rate be lowered, they said.
Bond investors, including mutual funds, plan to seek approval from the capital markets regulator to be part of the inter-creditor agreement, said the people, who asked not to be identified as the details are private. Mutual funds, which are big investors of the beleaguered shadow lender’s debt, will even discuss and seek necessary board approvals to be a part of any potential resolution plan, two of the people familiar with the matter said.
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Dewan Housing is among the worst hit after financier Infrastructure Leasing & Financial Services Ltd. group defaulted for the first time in June 2018, shaking investor confidence and shutting the door for financing for many shadow banks. Dewan’s credit rating was slashed to D from AAA this year as it delayed repayments.
A spokeswoman for the company didn’t immediately respond to an email and phone call seeking comments on the negotiations.
The lender’s ability to raise funds has been substantially impaired and the business has been brought to a standstill, casting doubt on its ability to continue as a going concern, it said in an exchange filing on July 14. The next day, Mumbai-based Dewan said it is working with stakeholders and creditors to ensure that there is a comprehensive resolution, without any haircut to lenders.
By Divya Patil and Suvashree Ghosh