Real estate major Unitech is expecting "significant" cash inflows over the next few weeks through private equity funding and divestment of stake in its telecom operations, Managing Director Sanjay Chandra said today.
"About Rs 1,200 crore of debt as well as Rs 770 crore of shareholder loans that Unitech will receive back once we get our partner (telecom) in place," he said.
Shares of Unitech, which had plunged 50 per cent on Friday on reports that the company has defaulted on land payments to the Greater Noida Authority, bounced back today.
At 1:24PM, Unitech was trading at Rs 36.80 on the National Stock Exchange, up 18.7 per cent.
Unitech is foraying into telecom through a 100 per cent subsidiary, Unitech Wireless.
Unitech Wireless has licences to offer services in all 22 telecom circles in India. Of the 22, the company has been allocated initial spectrum in 13 circles.
On Friday, Chandra had said the company was likely to divest 26-45 per cent stake in its telecom operations and may announce a tie-up with an international telecom company by early November.
He also said the company's cash position is pretty "comfortable".
"We are expecting significant inflows from private equity transaction, which we have already worked on, including the fund which we have raised on our own. We are starting to drawn down from that fund early next month," he said.
Unitech had raised $300 million from global investors for an international fund – Unitech International Real Estate Fund – in July.
In June, Chandra had said the company is planning to raise up to $1.15 billion through private equity in the current financial year to March to fund its hospitality business and Mumbai projects.
Reacting to the fall in the scrip's price, Chandra said," ...People are working in a concerted manner spreading malicious rumours about a couple of companies and creating panic in the market...and possibly with criminal intentions to make short term gains for themselves."
He also said the company has approached the regulators regarding the fall in the stock's price on Friday.
"... They (the regulators) have assured they will take whatever action is needed to punish whoever is found guilty," Chandra said.
No default
In his fourth clarification since Thursday, Chandra said the company has not defaulted on payments for land it bought from the Greater Noida Development Authority.
"Both in Noida and Greater Noida, we have about 10 to 15 properties. In the last one-and-half-years, we have paid over Rs 2,000 crore to the authorities," he said.
Citing a particular plot of land in Greater Noida, Chandra said, "The government could not give us possession for about 15 months (for that plot). In that particular sector of Greater Noida, they have rescheduled payments for all developers. There was no default whatsoever."
Chandra also denied rumours that Lehman Brothers is selling its stake in Unitech.
"Lehman is not even a shareholder in Unitech," he said.
Lehman Brothers Real Estate Partners, a realty private equity fund of Lehman Brothers, has invested Rs 740 crore for a 50 per cent stake in Unitech's Western Expressway project in Mumbai.
On reports that the company has pledged its shares to Indiabulls in lieu of any loans it has raised, he said, "Only properties have been pledged. As of September 30, our shareholding is still the same."
According to the shareholding pattern on the Bombay Stock Exchange's Web site, promoter and promoter group companies hold a 74.5 per cent stake in Unitech as of September 30.
Over the last few months, real estate companies have been pledging their shares to financial institutions as collateral for loans they have raised to tide over the liquidity crunch.
Unitech's total net debt was around Rs 7,700 crore as of June 30. "80 per cent of that will be secured against land," he said without elaborating, saying the company is in the silent period as it is close to announcing its second quarter results.
Unitech will announce its July-September results on October 31.
"We were facing some stress on the balance sheet on debt equity for sometime. We expect our gearing to come down significantly once our divestment in telecom operations and private equity transaction is complete," he said.
Gearing is a measure of financial leverage, reflecting the degree to which a company's activities are funded by owner's funds versus creditor's funds.
A company with high gearing is more vulnerable to downturns because it must continue to service its debt regardless of how bad sales are.
Residential projects
Chandra said the company's residential projects are fully funded. "All our projects will be on time and are making steady progress," he added.
Nearly 70 per cent of Unitech's total land being developed comprises of residential projects.
The company has already paid about Rs 1,400 crore for the land it acquired for its 347-acre luxurious residential project – Unitech Grande – in Noida.
In one of the biggest deals ever, Unitech had paid Rs 1,582 crore for the land it had bought for the Grande project in May 2006.
"Our total acquisition cost including stamp duty etc was around Rs 2,000 crore. We had five years to pay to Noida authorities. We have to pay about Rs 600 crore in another three years," Chandra said.
Going forward, Unitech is focussing on affordable housing projects.
"We have reduced the ticket size by doing smaller apartments. The demand is still very very large in that segment (affordable housing)," he said.
