Unitech to sell non-core assets to pay off debt

Unitech Ltd. | Construction - Real Estate | Construction & Infrastructure | BSE: 507878 | NSE: UNITECH

02 Sep 2011 Evaluate

Real estate firm Unitech will sell non-core assets such as land, IT parks and SEZs to pay off its debt, which currently stands at Rs 5,300 crore. The company has also managed to tie-up debt of about Rs 550 crore from two public sector banks in the last few months, after facing significant debt financing crisis in the last six months. The company plans to raise Rs 300-400 crore this year by selling land parcels, including one in Thiruvananthapuram. Unitech has also started talks with various private equity funds as well as overseas real estate investment trusts (REITs) to sell its four SEZs and one IT park. The company has close to 5.5 million sq. ft. of rent producing office space and another 2 million sq ft will be ready in the next 18 months. This is spread over four SEZs and one IT Park. The sale of SEZs would be completed in the next fiscal year as they now await the reaction of the SEZ authorities on some of the other SEZ transactions that have taken place in the market recently.

In the April-June 2011 quarter, the company reduced its debt by Rs 203 crore through its cash flows. Unitech’s debt has come down from a peak of Rs 10,500 crore at the end of December 31, 2008. Yet, the interest burden has not reduced owing to regular increase of bank rates. The company intends to raise close to Rs 500-700 crore annually for the next few years through sale of these assets. The target is a 10-15% reduction of debt on an annualised basis. The company got a first sanction from a PSU bank in the month of July for Rs 350 crore, which will be taken in tranches.