Unitech to raise funds via securities

Unitech to raise funds via securities
The Times of India, May 20, 2009, Page 25

Amrita Nair-Ghaswalla TNN, Mumbai

Real estate majors, hit by a severe cash crunch after high prices kept buyers of homes, offices and shops away, are in a frenzy to raise money. On Tuesday, cash-strapped builder Unitech received the approval of its board to raise additional long term funds by issuing securities.

On Monday, Indiabulls Real Estate raised $550 million by selling shares, while last month, the country's largest realty giant, DLF, raised $783 million by selling promoters' stake. In a bid to lessen its debt levels, the Bangalore-based realty developer Sobha Developers is also set to raise long term capital during the current fiscal (FY10).

Unitech's board has also agreed to raise funds by issuing warrants to the promoters, an official said. Last month too, Unitech had raised $325 million through a QIP (qualified institutional placement) ‘‘to part retire its Rs 8,900 crore debt and strengthen its balance sheet. The promoter holding in the company had fallen to 51% from 64%, post the QIP'', the official added.

‘‘The global credit crunch has adversely impacted the realty segment, leading to delay in under-construction projects and postponement of new projects,'' an analyst tracking the sector said. ‘‘This has ensured that most firms are in talks to sell prime properties,'' the analyst with Angel Broking added.

Unitech also plans to generate Rs 900 crore from the sale of two hotels in Gurgaon and a commercial office complex in Saket, New Delhi, by the end of June. The company plans to generate Rs 1,600 crore by selling assets, including plots and residential projects, by the end of the current fiscal.

In April '09, the company raised Rs 1,625 crore from share sale to select investors, as part of a plan to repay debt and invest in affordable housing projects. The company allotted 42 crore equity shares of Rs 2 each at a price of Rs 38.50 per share to 55 QIP allottees, the official added.

While DLF promoters recently sold a 9.9% stake to raise Rs 3,860 crore, the company also plans to raise Rs 10,000 crore in the next 2-3 months by selling some of its real estate projects.

Sources said Bangalore-based Shobha Developers is in the process of disposing land where projects cannot be launched in the near future.