Ahead of DHFL voting, Oaktree attacks Piramal bid
In a letter despatched on Sunday night to members of the committee of collectors, the RBI appointed administrator, Oaktree has stated it’s involved that regardless of its bid providing most worth for all stakeholders, it seems “there is a consistent campaign to misrepresent information on Oaktree’s bid. Information is not only being presented in an incomplete and inaccurate manner but also in order to discredit Oaktree’s bid and favour the Second Highest Bidder.”
Oaktree doesn’t title Piramal Enterprises anyplace within the letter. Instead it refers to it not directly calling it “the second highest bidder” all through. The letter was despatched by Fredrick Greyselle, Oaktree’s Singapore based mostly in home authorized counsel.
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A key level that Oaktree is harping on is the construction Piramal’s have proposed of their marketing strategy, that entails a merger between DHFL and Piramal Capital, its finance arm to swell the mixed entity’s networth to greater than Rs 18,000 crore and cushioning its capacity to situation debt. However, Oaktree has argued that this construction would rob the profit of any proposed recent capital infusion to the lenders of the troubled dwelling mortgage firm. Instead the “co-mingled” entity could be burdened by different liabilities. “By voting in favour of the second highest bidder’s plan, the CoC will be shifting its exposure to a new entity, whose assets have not been independently diligenced or subject to an asset quality review. The CoC should consider the possibility that the merged entity could be subject to imminent stress in its predominantly wholesale lending business, given the current situation in the sector. It would be a mistake to put the second highest bid to vote without giving a true picture of this entity to the members of the COC,” Oaktree stated.
It additionally stated, Piramal’s recent capital infusion of Rs 3800 crore to enhance the operational efficiency of DHFL within the first 12 months post-implementation of the decision plan, is and not using a agency dedication letter. In comparability, Oaktree’s provide of a Rs 1000 crore infusion as a cushion to DHFL lenders is backed by one.
The Oaktree letter states that CoC is discounting the upfront money quantity in Oaktree’s bid by Rs 2700 crores. “We want to categorically state that the total cash amount that would be received by the CoC immediately upon implementation of Oaktree’s Resolution Plan shall be Rs 17,400 crore. This would include, a value Rs 1000 cror valuation that was ascribed to DHFL’s stake in its insurance joint venture with Prudential. This amount, says Oaktree, “ will be paid to the financial creditors on an unconditional basis by way of upfront cash prior to the implementation of the resolution plan.”
PIRAMAL RESPONSE: IMAGINARY CONSPIRACY THEORIES
In response a Piramal spokesperson stated, all bidders had the chance to submit bids submit clarifications on Dec twenty second. “After seeing our bid, and recognizing that their bid falls short on various dimensions, Oaktree is now sending this series of letters, to alter the substantive submissions they themselves have formally made.”
The Piramal plan, in keeping with the corporate, merges DHFL with a AA rated entity, provides over Rs. 10,000 crore of fairness instantly, and gives readability on high quality and secondary market valuation of the non convertible debentures (NCDs.) “The alternative plan is a highly leveraged structure with minimal equity.”
Piramal’s key rivalry is the Oaktree provide is brief on upfront money, on internet current worth (NPV), on general rating, un-implementable attributable to insurance coverage associated issues, and “leaves DHFL lenders with weak debt paper due to the sub debt structure offered by Oaktree to themselves.”
OAKTREE WARNS OF LITIGATION
Making its intention to litigate, if mandatory, clear, Oaktree additional warned, that if its provide is evaluated on the premise of incorrect info or an misguided presentation of the monetary proposal, such analysis would nearly definitely be topic to judicial, administrative and investigative overview.
The Brookfield owned asset administration fund had previously written a number of letters to the CoC and even the RBI representatives alleging favouritism within the bidding course of which is affecting the credibility of the entire IBC course of amongst international buyers. “We do not need to remind the CoC that, as guardians of public money and representatives of diverse group of individuals (including many retail depositors and investors who are very vulnerable), discounting or failing to consider the upfront cash amount to the extent of Rs 2700 crores would disregard the IBC’s objective of value maximisation, and be open to challenge.”
Both Oaktree and Piramal has revised their provides a number of occasions within the run as much as voting.
