Piramal rebuts Oaktree's claims, alleges violation of rules

In a two-page rebuttal to the Oaktree letter to lenders dated Wednesday, Piramal has reiterated that its bid for DHFL offers the lenders the highest upfront cash recovery, has the highest score on the COC evaluation matrix, is fully compliant with all regulatory norms, and is immediately implementable.

In reply to the Oaktree letter, Piramal said the second highest bidder’s request to consider the Rs 1,700 crore should not be considered because it came after the bidding deadline. It also questioned the US based fund's claim of enjoying the highest credit rating.

After opening of the bids on Dec 23rd, on recognizing that their bid falls severely short, Oaktree sent an email on 24th Dec (2 days after deadline), offering an additional Rs. 1,700 crore, it alleged.

“DHFL resolution is a bid based process, not an “open auction” process. Bids, once formally submitted, are final and binding,” Piramal group said in the statement.

In between, 63 moons technologies, an investor with about Rs 200 crore exposure, has sought support from other bond and fixed deposit holders of Dewan Housing Finance Corp (DHFL) as it already filed an application in NCLT, Mumbai aiming to recover additional money.

The petition sought that the fraudulent transaction recovery benefit, which is a siphoned off money of approximately Rs. 30,000 crores filed by DHFL administrator…should come to creditors, the company said in a release on Friday.

“The promoters of DHFL have siphoned approximately Rs 30,000 crore, which has been traced by the Grant Thornton forensic audit report itself,” it said citing loan/investment losses of about Rs 50,000 crore.

Allowing correction or changes to bids after seeing all other competing bids, is a complete vitiation of the rules of the process. The additional amount offered post bid date is thus patently illegal," Piramal said.

Piramal also reiterated its claim that the Oaktree bid is based on just Rs 1 lakh of equity. Questioning how a non convertible debenture based on such a weak equitized business can receive a AAA rating.

"Oaktree claims that they have received ‘preliminary feedback from credit rating agencies’ that their NCD would be assigned a AAA rating.”

There are two serious violations of SEBI norms in this claim: Credit rating agencies are not allowed by law to provide any ‘credit opinion’ or have ‘indicative credit rating discussions’, Piramal said.

Without a formal rating being published, an issuer is prohibited by law from marketing an instrument to potential subscribers. In other words, till there is a formal rating published, SEBI norms explicitly prohibit the bidder from marketing their NCDs to COC members as something that ‘is likely to be assigned AAA rating’. Oaktree claim

is in direct violation of these 2 laws of the country," Piramal said.

The firm called Oaktree's valuation report done by PwC as a purely mathematical exercise that ‘assumes’ that there will be a AAA rating, and then calculates, with other arbitrary assumptions. "A castle in the air is being falsely marketed as manifest reality," Piramal said.

Both bidders have ended their letter reposing their faith in the CoC and hoping that they will make a fair choice.