DLF plans first foreign loan of $300 m

DLF plans first foreign loan of $300 m
Business Standard, June 20, 2009, Corporates & Markets, Page VIII

Agencies, fe Bureau, New Delhi

In what could be the after effects of economic slowdown, DLF Ltd, India's largest real estate developer, plans to borrow $300 million in its first overseas loan, a person close to the development said.

According to the source, on condition of anonymity, the company would borrow the money from Standard Chartered for a period of seven years and this will help the real-estate company lower its average cost of borrowing to about 12.2%, as against 12.5%.

While Arijit De, spokesman for the London-based bank, declined to comment, Sanjey Roy, spokesperson for DLF, did not reply to an e-mailed query.

Back home, the company is looking to sell land assets over the next one year to raise Rs 2,000 crore in a bid to retire debt. The plots include hotel land, residential plots and commercial land. The company has a net debt of Rs 13,958 crore, of which Rs 3,591 crore is due this fiscal. It already has a new long-term loan of Rs 2,500 crore sanctioned.

DLF has already reduced its land bank by about 43%, primarily by exiting two large township projects, since the long gestation period of the projects did not gel with its immediate plans. Its land bank is currently at 425 million square feet (msf), down from 751 msf earlier.

DLF will also monetise assets by selling its wind power business for Rs 900 crore. Exit from the Delhi convention centre would fetch Rs 850 crore. Then, there is a refund of Rs 400 crore from the state governments through the exit from two townships and the cash flow from residential projects.

This is part of the company's efforts to reduce its outstanding debt by half this fiscal by raising about Rs 5,500 crore, including proceeds of the plot sales.

Meanwhile, the developer has also put 11 million square feet of office and retail projects on hold as it will wait and watch for the current macro trends to improve. It has about 36 msf under construction, and an additional 12 msf that has been launched but where construction is yet to commence.

Shares of DLF jumped 2.56% on BSE on Friday to close at Rs 330.55 after touching an intra-day high of Rs 334.