New Delhi: Property developer Unitech Ltd said it has reduced its debt obligations due by March to Rs600 crore from Rs2,500 crore, by repaying in part Rs900 crore to mutual funds and restructuring some bank loans.
The company will repay the remaining Rs600 crore through sale of assets and internal accruals, managing director Sanjay Chandra said after an extraordinary general meeting held in Gurgaon on Monday.
Temporary relief: Unitech managing director Sanjay Chandra. Unitech’s total exposure to mutual funds is Rs1,400 crore. Harikrishna Katragadda / Mint
India’s second largest real estate developer by market value owes 60% of this Rs600 crore to banks and 40% to mutual funds, he said. Unitech’s total debt is about Rs8,000 crore.
“We have restructured over Rs1,000 crore of debt and some of it is not part of the debt that is due for repayment by March this year,” Chandra said. “The newer borrowings are at a 14% rate of interest.”
Unitech’s total exposure to mutual funds is Rs1,400 crore, out of which it had raised Rs900 crore from less than 10 mutual funds including Reliance Mutual Fund and Kotak Mutual Fund. This Rs900 crore was due on 19 January. A company spokesman told Mint that Unitech had prepaid “a substantial part of Rs900 crore to mutual funds on 17 January and the rest has been rolled over”. Chandra said the payments were funded by internal accruals.
An analyst, who said he has been briefed by the company, said Unitech has not prepaid but rolled over Rs900 crore borrowed from mutual funds. “While it is a good sign that their debt is getting reduced, concerns regarding repayment and refinance of loans are far from over,” the analyst said, on condition that neither he nor his employer be identified. “The company will still have to repay mutual funds in three months.” Mint could not independently verify this.
The Business Standard newspaper reported on Monday of the arrangement with the mutual funds without naming them.
Unitech plans to convert about Rs2,500 crore (different from the amount recast already) of short-term debt to long-term debt, Chandra said.
Shareholders at the company’s meeting on Monday separately approved the raising of additional long-term funds up to Rs5,000 crore. They also approved an increase in authorized share capital of the firm to Rs1,000 crore from Rs500 crore.
The amount would be raised through the issue of fresh equity and convertible debentures among other instruments. “The resolution helps us in keeping our options open,” Chandra said. “We are very flexible about raising money and we will do so depending on the needs of the company.”
On the asset sale, Chandra said the transactions would be closed soon. Unitech has put its hotel in Gurgaon and an office property in Saket, a Delhi neighbourhood, up for sale.
Mint reported on Monday that the company was selling some of its properties including so-called mixed-use developments dedicated to building schools and hospitals.
Unitech Wireless Ltd, the telecom unit of Unitech, expects the first investment of about Rs1,250 crore from Norway’s Telenor ASA to come in by the end of January, Chandra said. Unitech will then transfer Rs900 crore of debt borrowed for the telecom business to Unitech Wireless’ books.
Chandra also said the company’s unit, Nectrus Ltd, will soon consider buying shares of Unitech Corporate Parks, or UCP, which is listed on London’s Alternative Investment Market. Nectrus already holds 40% stake in six UCP projects.
“We are looking at buying shares because the shares are trading at a 60% discount,” Chandra said. UCP’s market capitalization is around $36 million (Rs174.96 crore), R. Nagaraju, general manager, corporate planning and strategy, said.
Shares of Unitech rose 5.98% to Rs31.90 on the Bombay Stock Exchange on a day the bourse’s benchmark index expanded marginally by 0.06%.