- Majority of lenders are in favour of a rebid.
- Creditors confident they are well within their rights to ask for rebid.
- The bidding process became more competitive after Adani's aggressive late intervention.
“We expect the majority of the creditors, including retail debenture and fixed deposit holders, to vote in favour of rebids because it is in everyone's interest to get the best price. Banks are already on board and with the trustee for the debenture holders also likely to seek rebidding, we expect to get the 51% votes needed,” said a person involved in the process.
Creditors consult Rohatgi
Creditors are confident that they are well within their rights to ask for a rebid as they seek to maximise returns. They have also sought former attorney general Mukul Rohatgi’s opinion on whether rebids can be done in the current situation especially in the light of opposition from three bidders to the Adani Group’s late bid. The three bidders have also opposed calls for a revised fourth bid with new terms and conditions.
All three bidders have been opposing the unsolicited revised offer from Adani because it was submitted after the initial deadline and have threatened to walk out of the process if the Adani bid was considered. It remains to be seen whether these bidders would try to match or outbid the Adani offer in a new bid process.
"We have taken legal opinion from former attorney general Mukul Rohatgi and also have previous precedence. We know where we stand and will not be swayed by the bickering of the bidders. Getting the best possible price is in the interest of all, more so for the small savers who stand to lose a lot more if we don’t get the best value available," said the first person cited above.
With a debt of close to Rs 88,000 crore, DHFL is the first NBFC undergoing the bankruptcy process since the RBI was given the power to refer home financiers to the bankrutpcy tribunal a year ago. It is also the largest such case in terms of amount and the number of financial creditors including thousands of debenture and fixed deposit holders.
Such small and large debenture holders make up more than half or Rs 45,382 crore of the debt the company owes. They are represented by Catalyst Trusteeship on the CoC and are expected to vote for better bids.
State Bank of India (SBI) and Union Bank of India (UBI), the top two lenders to the company, are also in favour of revised bids.
Voting till Wednesday
Voting to decide a rebid was initiated over the weekend and was supposed to end on Monday but was extended until 5 pm on Wednesday as some creditors sought more time due to Monday being a bank holiday.
"After we get the result of the voting the process for inviting fresh bids will start. Bidding is open to all those who have expressed interest earlier. The deadline for the new bids will be by the middle of December," said a second person involved in the process.
Bankers point out that a full recovery is still not on the horizon. Even the latest Adani offer puts the haircut at 62% to the total debt.
"All this talk about late bidding or even Adani's letter to the administrator asking to forfeit the other bidders’ deposits are just pressure tactics. The private equity executives have their own bonuses to take care off, but as banks we are managing public money and will have to contend with the CVC if we go for anything lower than what is on offer. So we will follow all processes and then make a choice," the first person cited above said.
Bankers point to previous precedents, like UltraTech's late entry to take over Binani Cement or Arcelor Mittal's multiple revision in offers to finally take over Essar Steel.
More importantly, they also have a legal precedence as two years ago, the National Company Law Appellate Tribunal (NCLAT) had ruled that the insolvency resolution process should aim to extract the maximum value from auctions of stressed assets while approving UltraTech's revised bid of Rs 7,900 crore to acquire debt-laden Binani Cement.
Binani’s committee of creditors considered an improved bid from UltraTech after Dalmia Cement’s Rs 6,930 crore bid was declared the highest bidder. Rajputana Properties, owned by Dalmia Bharat, filed a case against the decision. UltraTech Cement finally bagged Binani Cement after a favourable court ruling.
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4 Comments on this Story
Bipin Kochar51 days ago
The sharp rise in DHFL share price reflects the sharp improvement in collections now that the moratorium is over - banks should hence aim for 100% recovery of their dues
Hemant K Passi52 days ago
Definately a positive step for the lenders who want to extract maximum value for their stranded assets. Its an open & transparent bidding then why others should have objections to reinvite.
Definatelt positive for Adani Group who foresee value in the assets which shall open up new avenues for them.
Sunil Kumar Bhargava User53 days ago
Good for bond holders