Mortgage financier Reliance Home Finance (RHF) has written a letter to the lenders’ consortium seeking its approval so that it can repay retail bondholders. The company has to repay Rs. 91.78 crore to 19,964 retail investors on or before January 3 and January 15, 2020. “We have been requesting the Bank of Baroda-led lenders committee that retail bondholders should be paid their dues on time and without any haircut,” chief executive Ravindra Sudhalkar said in a letter to Bank of Baroda.
Reliance Home Finance is unable to pay bondholders because of a restraint placed by the lenders, as the company is undergoing a bank-led resolution process.
“The company is unable to proceed with such payment owing to the complete restraint placed by the banks on securitising assets and distribution of funds to pay off any lenders,” Sudhalkar said in the letter. The company also said it has good quality assets of Rs. 3,500 crore, and it has adequate liquidity to pay investors. “In the interest of retail investors, the company once again seeks urgent approval to distribute the funds only to retail investors,” it added.
Reliance Home Finance has written the letter after reports say around 20,000 debenture holders, including individuals, mutual funds and retirement bodies, are set to take the first hit on their investments as the full repayment is due in January. The trustee of such junk bonds has warned the company of legal action if it fails to repay the same.
In September, various rating agencies had downgraded the bonds to junk following the financial difficulties being faced by it.
SBI Mutual Fund in November has written down its exposure to Reliance Home Finance to zero, prompting steep cuts in several close-ended hybrid schemes of SBI Mutual Fund.
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Source: Financial Express
