Dewan Housing Financial Corporation (DHFL) is steadily paying off to mutual funds that hold its commercial paper to avoid litigation, sources said, as some of them had taken the legal route.
In a bid to prevent any litigation from derailing the resolution plan, the company is repaying due against CPs. Sources aware of the developments told FE that the company is in the process of paying off outstanding CP-related obligations from its monthly cash flows it receives in the form of equated monthly installments from customers. It is believed that the company receives about Rs 2,300 crore through these EMI payments.
The move comes at a time when at least two mutual fund houses-DSP Mutual Fund and IDBI Mutual Fund-initiated legal proceedings against DHFL. According to a note released by DSP on Monday, the home loan financier has already paid off the fund house in entirety. DSP had a total exposure of Rs 150 crore to commercial papers issued by DHFL. DHFL informed exchanges later in the day that it had honoured obligations the for the payments due in the ordinary course, as per their original repayment schedule until 5th July 2019. This did not include any payments on account of acceleration of any liabilities, the statement said.
"DSP Mutual Fund had an exposure of Rs 150 crore to Commercial Papers issued by DHFL with scheduled maturity on June 25, 2019. The company had made part payments of Rs 60 crore on June 25, 2019 and Rs 15 crore on June 28, 2019, which means that cumulatively DHFL had paid Rs 75 crore (equivalent to 50% of the total exposure) till June 28, 2019. Over the past two months we have been engaged with the issuer for the pending recoveries. On September 7, the company paid the balance Rs 75 crore, resulting in complete recovery for the CPs held by various schemes of DSP Mutual Fund," said DSP MF in its note.
Sources within the company also said that it has just received the money and is in discussion with lawyers to bring the matter to its logical conclusion. While IDBI MF has also received its balance CP amount of Rs 12.5 crore on Saturday. Officials in the fund house said that since they have got money they will not pursue the case. Data from Value Research showed mutual funds have investments of over Rs 3,300 crore in debt instruments issued by DHFL as on May, 2019, and have an exposure of Rs 197.77 crore to the CPs issued by DHFL.
DHFL also owes banks Rs 38,000 crore and an additional Rs 34,000 crore to bondholders.