Oaktree Capital, one of the suitors in the resolution process for debt-ridden DHFL, was put on the spot on Wednesday after CARE Ratings said it has not offered any rating but a research-oriented advisory to a proposed debt instrument mentioned by the US-based firm in its bid document.
“CARE Advisory Research and Training Limited (subsequently referred as CART) a subsidiary of CARE Ratings Limited had undertaken an advisory proposal for Oaktree,” the ratings agency said in a regulatory filing.
It was clearly a research-oriented advisory proposal, purely based on publicly available data and no rating or grading exercise was carried out, it said, adding the ratings company was in no way involved in the matter.
“We would also like to categorically state that CARE Ratings Limited has not issued any Rating or any kind of Indicative Ratings under the said proposal.
“Further, the question of CART issuing any kind of ratings or indicative rating on the proposal does not arise because, CART does not hold any regulatory license to undertake ratings business,” it said.
Since the conclusion of the fifth and final round of bidding last month, Piramal Enterprises and Oaktree Capital have each claimed that their bids are the highest and fully implementable.
Oaktree, in its bid, claimed that post-resolution, DHFL’s non-convertible debentures (NCDs) would be assigned an AAA rating if its resolution plan is accepted.
Based on a complaint, markets regulator Sebi earlier this month asked the mortgage firm’s administrator to explain the claim by the suitor.
In a letter dated January 5, Sebi said it has received complaint against unnamed Credit Rating Agencies (CRAs) that have allegedly offered their views to a potential issuer or bidder (Oaktree Capital) on a future rating of DHFL resolution plan and instruments, which is in violation of regulations.
The Committee of Creditors (CoC) is examining each bid in detail, including qualitative and quantitative parameters. It is expected to take a call on Thursday.
In November, 2019, the Reserve Bank referred Dewan Housing Finance Limited (DHFL), the third-largest pure-play mortgage lender, to the National Company Law Tribunal (NCLT) for insolvency proceedings.
DHFL was the first finance company to be referred to the NCLT by the RBI using special powers under Section 227 of the IBC.
Prior to that, the company’s board was superseded and R Subramaniakumar was appointed as the administrator. He is also the resolution professional under the Insolvency and Bankruptcy Code (IBC).
As of July 2019, the company owed ₹83,873 crore to banks, the National Housing Board, mutual funds and bondholders.
DHFL was sent to bankruptcy after the government on November 15, 2019, enabled the Reserve Bank to send large financial services companies, excluding banks, to the NCLT for insolvency proceedings.
