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Phase one of Prestige Estates-Blackstone deal complete, Street cheers debt cut

As December quarter, Prestige Estates' net debt stood at Rs8,465 crore while gross debt stood at around Rs9,585 crore.Premium
As December quarter, Prestige Estates' net debt stood at Rs8,465 crore while gross debt stood at around Rs9,585 crore.

  • Brokerage house CLSA has retained a buy rating on the stock. It estimates the company's net debt to decline to Rs1,900 crore from the current levels going ahead. CLSA adds that a stronger balance sheet paves way for re-rating of the stock

MUMBAI: Shares of real estate company Prestige Estates Projects Ltd rose around 3% on the National Stock Exchange in opening deals on Friday, driven by the company's update on its much-awaited deal with the Blackstone group.

In a disclosure to the exchanges on 10 March, the company said it has concluded phase 1 of the proposed transaction with the US-based private equity giant Blackstone Group worth Rs7,467 crore. It should be noted that the total enterprise value of this deal is approximately Rs9,160 crore.

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Phase 1 includes 100% stake in 6.2 million square feet of operational commercial assets, 100% stake in under construction hotel, 85% stake in retail assets, and 85% stake in under construction Oakwood Residences. Phase 2 of the transaction is expected to get completed by the end of next quarter, the company said.

Investors in the stock were eagerly waiting for the deal to conclude, for which a term sheet had been signed between both the parties in November 2020. The company management had indicated that it will use part of deal proceeds to fund its capital expenditure plan and retire debt. Given its leveraged balance sheet, utilisation of funds was a key monintorable. In-line with expectations, the company has repaid a portion of its debt.

According to latest disclosure by Prestige Estates, debt has been reduced to the extent of Rs4,594 crore post the phase 1 deal. It should be noted that at the end of the December quarter of FY21, its net debt stood at Rs8,465 crore while gross debt stood at around Rs9,585 crore.

Foreign brokerage house CLSA has retained a buy rating on the stock. It estimates the company's net debt to decline to Rs1,900 crore from the current levels going ahead. CLSA adds that a stronger balance sheet paves way for re-rating of the stock.

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