Lodha Developers changes NCD terms, investors to get early interest payment

Investors will continue to get 9.5% interest on NCDs worth Rs 495 crore after completion of the moratorium period

Investors to non-convertible debentures (NCD) of Lodha Developers will start receiving interest payments one year earlier than the date agreed as the Mumbai-based realtor has changed some repayment terms. The changes pertain to NCDs issued in July 2017.

According to the new terms, the investors would continue to receive 9.5 per cent interest on NCDs worth Rs 495 crore after the completion of the moratorium period of 12 months. Earlier, the moratorium period was 24 months.

Lodha’s NCD investors — HDFC Property Fund, Cloud Investments, Superior Investments and Vistra ITCL — have agreed to the new terms, filings with the stock exchange show.

For the next 12 months (after moratorium), interest accrual will happen, and the company has the option to pay on a quarterly basis.

A Lodha official said they decided to the change of terms because they wanted to start paying interest earlier — at the start of year two rather than at the end of year two.

A HDFC Property Fund spokesperson said they have allowed the developer to prepay the interest after 12 months i.e. reduced the moratorium period from 24 months to 12 months.

Lodha’s statement to the stock exchange clarified that any such amount of interest that has not been paid for a relevant quarter shall become payable at the expiry of the 24 months from the closing date of the NCD. 

“It is clarified that non-payment of interest during the 12 months from the moratorium date shall not be considered as an event of default. Upon the expiry of the 24 months, all interest shall occur and become payable at the end of each quarter till the date of redemption of all debentures,” the statement said.

To this, HDFC officials said that according to the original agreement, non-payment of interest only after 24 months was an event of default. “Therefore, by implication, non-payment of interest up to 24 months will not be an event of default, which is being reiterated in the filing with the exchange,” a HDFC Property Fund’s spokesperson said.

Since NCDs are listed, a disclosure was required to be made to stock exchange by Lodha prior to making the interest payment, the spokesperson said.

Lodha, like most other realtors, is facing headwinds. Its debt grew by 21 per cent to Rs 23,100 crore in the financial year ended March 2018 even as sales were up 25 per cent to Rs 9,670 crore compared with FY17.

An initial public offering (IPO) was to add another Rs 5,000 crore to the company’s cash vault by September. But with market conditions deteriorating, the firm decided to put the IPO in cold storage. Instead, the firm decided to sell its properties in London and equity stake in the Palava project to collect the Rs 5,000 crore.