DHFL resolution: Oaktree Capital shoots letter to RBI, seeks fair play

Oaktree Capital, one of the bidders for troubled mortgage firm DHFL, has alleged, that inspite of it offering maximum value to stakeholders, there is a consistent campaign to misrepresent information about its bid.

The firm shot-off a letter to Reserve Bank of India (RBI) on Sunday, ahead of voting by lenders on bids which begins this week. Oaktree and Piramal group are in close race to get control over DHFL. The Adani group is also in fray.

Oaktree said information is being presented in an incomplete and inaccurate manner to discredit its bid. The Oaktree letter confirms that it did not give its final bid on December 22 -- the last date of offering final plans -- and did so only after Piramal submitted its plans. "It was only after Piramal offer was made to CoC, Oaktree raised its offer by Rs 1,700 crore. But, Piramal is offering more money upfront," said a source close to the development. Interestingly, both offers provide zero value to shareholders of DHFL.

It claimed the equity infusion by Second Highest Bidder is uncommitted. It said that the Second Highest Bidder has sounded out on making a fresh capital infusion of Rs 3,800 crore to improve operations in the first 12 months post-implementation of the resolution plan.

This is without a binding commitment or a firm commitment letter, it claimed.

Oaktree has, on the other hand, committed to providing a fresh capital infusion of Rs 1,000 crore as a cushion to DHFL lenders, by way of a firm commitment letter, it claimed.

DHFL is undergoing the Corporate Insolvency Resolution Process (CIRP), and is currently being managed by an administrator who is being assisted by an advisory committee in discharging duties. Both the advisor and the committee were appointed by RBI.

All the lenders have made substantial provisions for their exposure to DHFL. This is the first case of a finance company being taken under Insolvency and Bankruptcy Code (IBC) and the Reserve Bank of India is keen to see an effective resolution in this case.

Piramal hits back at Oaktree

A Piramal official spokesman hit back at Oaktree (OT) saying the US company is floating imaginary conspiracy theories which do not alter obvious facts.

"All the bidders had the opportunity to submit bids post clarifications on December 22. After seeing our bid, and recognizing that their bid falls short on various dimensions, OT is now sending this series of letters, to alter the substantive submissions they themselves have formally made," it said.

Piramal said the OT bid is short on upfront cash, short on NPV, short on overall score, un-implementable due to insurance related complications, and leaves lenders with weak debt paper due to the sub debt structure offered by OT to themselves.

"The Piramal plan merges DHFL with a AA rated entity, offers Rs 10,000 Crore of equity immediately, and provides clarity on quality and secondary market valuation of NCDs. The alternative plan is a highly leveraged structure with minimal equity," it said.

This mail from the applicant appears to be under the mistaken belief that threatening CoC members with consequences is going to alter these facts and change the course of a legally run, transparent process in our country, the spokesperson said.