Unitech raises $325 mn from QIP

Unitech raises $325 mn from QIP
Business Standard, April 17, 2009, Page 4

BS Reporter / Mumbai

The issue was subscribed more than two times

Unitech Ltd, the country’s second-biggest real estate developer, said it raised $325 million (Rs 1,625 crore) from selling new shares to qualified institutions to repay a part of its debt of over Rs 8,900 crore and strengthen capital.

The shares were sold at Rs 38.50 a piece, or 11 per cent discount to the company’s closing share price on the Bombay Stock Exchange today. Unitech shares today ended trading 10 per cent lower, at Rs 43.20, on the BSE.

The New Delhi-based developers’ issue, which was subscribed more than two times, was 90 per cent lapped up by overseas investors, a company official said. Domestic investors bought the remaining shares.

HSBC, Prudential, Och-Zif, Orient Global and Sandstone Capital were some of the investors which participated in the offer. After the issue, the promoters’ stake in the company would fall to 51 per cent from 64 per cent, indicating a 13 per cent dilution post issue, the official said. The company will issue 420 million new shares, after which the equity is expected to rise to 2.02 billion shares.

Unitech managed to complete its QIP issue on a day when General Growth Properties Inc, the second-biggest mall owner, filed for the biggest real estate bankruptcy in US history after amassing $27 billion in debt.

Unitech has been struggling to repay a part of its burgeoning debt, which spurted to Rs 10,907 crore by December 2008. The company has divested a part of its non-core business, namely telecommunication and a hotel property, for repaying the debt.

The total debt on the company’s books as on March 2009 stood at Rs 8,900 crore, of which it has to repay Rs 2,500 crore in this fiscal year. The developer is expected to repay a part of the short-term debt on April 19 and restructure the balance for 6-12 months.

Unitech’s debt to equity ratio is expected to drop to 1.4 after the equity infusion. It was 2.4 on December 2008.

The company plans to use the money to develop its affordable housing segment. It plans to launch 40 such projects during the fiscal year ending 2010, aggregating 30 million square feet.

“Unitech continues to remain focused on cash-flow management, with a well-defined plan to pursue selective asset sales and repay debt,’’ said a top company official.

The developer plans to complete the sale of four hotels in Noida, Kolkata and Gurgaon in the next six months. It also expects to sell stake to private equity in several projects, according to investment bankers.

Unitech expected to complete the sale of its Saket office in the next quarter, said a banker. It had already signed agreements for sale of its Kochi projects and school plots in Gurgaon, they said.

Unitech’s QIP issue is the first such placement in as many as eight months after the Securities and Exchange Board of India changed the QIP (qualified institutional placement) norms.

Last August, Sebi had amended the pricing norms for QIPs by allowing companies to fix the price based on the average price of two weeks. Earlier, companies had to fix the price based on the average price of the last six months. Not a single QIP issue, however, has hit the market since then.

PTI reports: The Unitech Corporate Parks Plc said the global financial firm, HSBC Holdings, has acquired over 16 per cent stake in the company.