Unitech Ltd QIP raises $325 m

Unitech Ltd QIP raises $325 m
The Financial Express, April 17, 2009, Page 1

Corporate Bureau, New Delhi

The country’s second-largest real estate firm, Unitech Ltd, on Thursday raised $325 million (around Rs 1,567.75 crore) through the qualified institutional placement (QIP) route, mainly to service debt of nearly Rs 9,000 crore. The one-day placement was priced at Rs 38.50 a share and was oversubscribed two times.

Following the QIP, the promoters’ stake is expected to come down to around 51% from the current 67.46%. According to sources, FIIs subscribed to 92-95% with the remainder going to domestic funds. The major FIIs are HSBC, Prudential, Och-Ziff, Orient Global and Sandstone Capital.

However, a Unitech spokesperson could not be contacted for comment.

The QIP and ongoing debt restructuring is expected to strengthen the capital structure and improve cash flows of the company, whose debt burden increased from Rs 8,552 crore on March 31, 2008 to Rs 10,907 crore by December 31, 2008. This was reduced to Rs 8,900 crore as on March 31. With the QIP equity infusion, Unitech’s debt-to-equity ratio is expected to fall from 2.4 on December 31, 2008 to 1.4 on March 31.

Sources said all Unitech’s near-term repayment liabilities have now been addressed. Overall, it now has a higher proportion of long-term debt with only Rs 2,500 crore due for repayment in the current financial year. Part of the near-term debt due on April 19 will be repaid on time and the rest rescheduled by 6-12 months.

“Even in these times of depressed valuation if such huge funding can be raised, then one needs to take a relook at the sector,” said Amitabh Chakraborty, president-Equity at Religare Capital Markets.

Unitech’s shares closed down 9.78% at Rs 43.35 on the BSE on Thursday.