Delhi-based property developer Unitech is planning to slash its total debt by at least Rs 1,000 crore by June through sale of assets, issuing convertible instruments and pre-sale of apartments, company executives said.
The company had nearly Rs 10,465 crore of debt on March 31, 2008, and after repaying some of that and rolling over debt with the nationalised banks and mutual funds in the past fiscal, its debt is still over Rs 8,000 crore. It was planning to reduce this to Rs 7,000 crore in the next two to three months, the sources said.
They added that options are being explored to also raise as much as Rs 500 crore through convertible instruments, with buy-back options three years later. A Unitech spokesperson declined to comment on the fund-raising plans.
The company was also expecting cash flow of Rs 1,700 crore in the current financial year from sale of existing properties, pre-sales of residential apartments and customer receivables, sources said. The company expected to get nearly Rs 500 crore from that last category of Rs 1,350 crore, the sources said.
However, analysts tracking the company say it will be tough to raise funds through asset sales in the current environment. “While parts of Unitech’s efforts have been successful, particularly in the telecom stake sale and sale of the hotel in Gurgaon, we believe further asset sales in the current environment will be difficult,”’ Citigroup analysts said in a recent report.
They are also concerned about the projected cash inflows. “The company relies mostly on its projects in Kolkata and Gurgaon for operational cash flow. The current situation of the market is not conducive for the company to generate more than Rs 800 crore worth of cash in a fiscal,” said Rupesh Sankhe, equity analyst, Centrum Broking.
However, Sankhe is optimistic on the company’s ability to raise money through its debtors. “The company will not have problem in getting this money,” Sankhe added.
Unitech has been selling assets to raise funds and repay its debt. The company got Rs 380 crore from the stake sale in its telecom arm — Unitech Wireless — to Norway’s Telenor. A company executive said it might use this amount to repay Rs 500 crore due to mutual funds by April 19 and roll over the rest.
The company has also sold its Gurgaon hotel to an investor in Delhi for around Rs 235 crore, of which it has got 45 per cent of the proceeds. The company was also in talks with buyers to sell its office complex at Saket in South Delhi, from which it was expected to make around Rs 500 crore, and some amount from the sale of hospital/school plots and hotel assets this year, sources said.
The company had to repay a debt of Rs 2,500 crore to banks and mutual funds by March 31, 2009. The company has rolled over Rs 1,000 crore it has taken from banks and around Rs 500 crore that it owed to mutual funds. The company has repaid Rs 400 crore from mutual funds and restructured another Rs 600 crore.
“We may use part of the Rs 380 crore received from Telenor to repay mutual funds and roll over the rest,” a company official said.
