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| Unitech board okays plan to raise Rs 5,000 crore |
| BS Reporters / New Delhi Dec 23, 2008, 00:19 IST |
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 Company to call EGM for shareholder approval on January 19.
The board of Unitech Ltd, the country’s second largest realty company, has approved a plan to raise Rs 5,000 crore through debt and equity issues and will convene an extraordinary general meeting on January 19, 2009 for shareholder approval.
Sanjay Chandra, Unitech managing director, said today’s proposal was a flexible enabling provision. “The company could raise these resources through private placement, public issues on overseas stock exchanges, non convertible bonds, foreign currency convertible bonds or a combination of these,” he added.
Declining to discuss details, Chandra said the company intends to use the funds to reduce its debt of over Rs 8,000 crore.
The company has also already decided to raise around Rs 4,000 crore by divesting some of its assets such as hotels, commercial real estate and institutional land. Discussions are on with buyers, including private equity firms and strategic investors, and the company expects to close these transactions in January.
It may be recalled that the company planned to raise Rs 4,000 crore in January 2008 at around Rs 400 a share through a private placement. The deal was called off when the Indian stock market crashed on January 21-22 and investors decided to pull out.
At the current market price of Rs 45 per share, Unitech’s total market capitalisation is just Rs 7,500 crore. If the company decides to raise equity of Rs 5,000 crore, the promoters’ stake would be significantly diluted, said a banker on condition of anonymity.
“The company's current valuation is more due to the risk aversion in the global context. The inherent value of the assets owned by Unitech is much higher,” Chandra said.
Also read: December 19: Unitech up on investment plans
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