After raising Rs 5,550 crore in less then three months time, Unitech , the second largest developer of the country , said it will bring its net debt down by 36 per cent in July 2009 as the company plans to use the money raised through second round of Qualified Institutional Placement(QIP) route to repay its debt.
"The company's net debt will come down to Rs 5,000 crore in July this year from the current level of Rs 7,800 crore", said a company official.
On June 26, the company raised $575 million (Rs 2770 crore ) by issuing 342 million shares at Rs 81 per share to institutional investors. This was the second round of fund raising exercise from the institutional investors as the company had raised Rs 1625 crore in April this year by issuing 421 million shares through the same route. The company’s promoters would also be pumping in Rs 1,155 crore by subscribing to 274 million warrants at Rs 50.75 each.
“The company management wants to address all the debt related issues so that it could focus to build on the sales momentum created over the last 3 months (sold nearly 4.5 mil sq ft , more than 4000 housing units) and achieve its targeted sales of 20 million square ft for the year.”, said the official
“We had used Rs 7,00 crore out of the Rs 1625 crore raised in April this year, to repay our debt. The rest of the money will be used for other purposes. However, the fresh amount of Rs 2,770 crore raised through second QIP will only be used to clear our debt”, the official added.
The company’s debt equity ratio will come down to 0.52 from its previous level of 1.1 which would be the lowest in the industry.
The company is also looking to raise $200 million through private equity by selling stake in subsidiary that will be set up for its affordable housing projects. Unitech plans to sell 15,000 units by the end of this year that would be priced at Rs 10 lakh - Rs 30 lakh . According to sources TPG , Warburg Pincus, IL&FS and Sun Appolo are the major private equity funds that are in talks with the company for buying stake in the affordable housing subsidiary.
For the equity shares issued on June 26, demand from foreign institutional investors was 96 per cent and only 4 per cent of the demand came from the domestic insurance companies and mutual funds. Among the 40 investors that subscribed to shares Soros , TPG , Prudential, Nomura , Farallon , DE Shaw, Sansar , Sandstone, Amiya , Duquesne , DWS and Mirae were the largest.
