New Delhi: India’s second largest realty firm Unitech is in talks with banks to raise an estimated Rs900 crore loan over the next few days as it needs to repay an existing debt of Rs1,100 crore in the current month, rating agency Fitch said.
Downgrading ratings on various debt programmes of Unitech, Fitch said that the actions reflect the company’s continued delay in raising the required funds and increasing uncertainty regarding its ability to service its interest cost and fulfil its immediate debt/land payment obligations.
The agency said that though the company has made some progress on its asset sales and fund raising from other sources, the quantum and timing of these remain uncertain, which increases the risk of delays in servicing its debt obligations in a timely manner.
However, Fitch noted that “management is in discussion with a few banks and expects to raise an estimated Rs 900 crore in bank loans in the next few days”.
The rating downgrades reflect the rapidly deteriorating real estate sector and the likely impact on Unitech’s operating performance, it said.
“Fitch anticipates that operating performance in 2009 will continue to be weak due to the significant slowdown in the demand for properties,” the statement said.
The agency said that it will continue to monitor the company’s financial and operating prospects as well as its liquidity position.
Fitch has put all of ratings on Unitech’s debt programme on ‘Rating Watch Negative´ (RWN), which reflect that the ratings may be downgraded or remain at the current level. The timeliness of servicing the large payments falling due this month would be the key to resolving the RWN.