Oaktree says it has offered higher fair market value, credit rating for DHFL bid

Oaktree says it has offered higher fair market value, credit rating for DHFL bid

Mumbai: Private equity fund Oaktree has reiterated its higher fair market value, better credit rating and unconditional offer in a fresh letter to the committee of creditors and RBI appointed administrator amidst ongoing voting for finding the buyer for DHFL. The letter signed by the fund’s in house legal counsel Frederick Grysolle, has asked for fair treatment by creditors making one more pitch for its offer against that of Piramal Enterprises.

“Based on fair market valuation, the difference in the fair market value of our financial proposal against the financial proposal of the second highest bidder is Rs 4,503 crore,” Oaktree said citing an independent valuation report by consultancy firm PWC, its AAA credit rating, qnd the lower tenure on debentures issued.

As per creditors’ quantitative evaluation, Piramal’s offer has received a score of 94 points to Oaktree’s 85 and 79 for Adani, said people familiar with the matter. When it comes to the equity portion, Piramal scores a full 10 while Oaktree gets 2.6.

In its letter Oaktree has asked lenders to consider its Rs 1000 crore offer it has ascribed to DHFL’s stake in DHFL Pramerica Life Insurance and another Rs 1700 crore as additional interest likely to be generated between the final NCLT approval and when the company control is finally handed over as upfront cash.

“The resolution plan expressively reserved our right to provide for additional interest income for the benefit of the financial creditors. We reiterated that it was an integral part of our resolution plan by way of our additional interest income. A failure to consider this upfront cash amount of Rs 2,700 crore is unjust and violative of the principle of value maximisation,” Oaktree said.

In absolute terms Oaktree envisages a recovery of Rs 35,700 crore for creditors, Piramal’s is at Rs 35,250 crore and Adani’s at Rs 32,860 crore.

Oaktree reiterated that its offer has the highest credit rating and unlike Piramal’s offer does not contain any “contagion risks” from the idebtedness of its exisiting businesses.

“Oaktree has ‘committed’ to infuse amounts to DHFL by way of equity and debt. This is made clear in the commitment letter attached to the resolution plan. Oaktree will turn around the operations of DHFL entity on a standalone, going concern basis. The entity will not be merged into another entity that itself highly levered,” the US based fund said pointing out that Piramal’s offer to merge its business with DHFL will result in cash flows generated by DHFL to be used to service Priamal’s existing debt.

Oaktree’s letter is the latest of a series of communications by both bidders to lenders as they seek to influence what is a very close bidding war in their favour. The last date for voting is January 14.

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