Omaxe gets moratorium on 40% of debt

New Delhi-based developer, Omaxe Ltd, has managed to get more than a year’s postponement on repayment of principal and interest on 40 per cent of its debt, according to a top company official.

Omaxe, which has about Rs 1,513 crore worth of debt, said banks had granted the company a year’s moratorium on Rs 600 crore due for repayment by September 2009. The company is in talks with lenders for a similar concession for an additional Rs 300 crore debt, due for repayment later this year.

“Ten out of 14 banks have granted the moratorium on interest or principal on loans for the next 12-18 months and we are in advance talks with the remaining banks for the same,” said Sunil Malhotra, vice-president, finance. “After this, we won’t have more than Rs 50 crore due in the next 12 months,’’ he said.

The company had earlier said it was trying to restructure Rs 900 crore worth of debt, as it was facing a cash flow problem due to slowing sales.

Omaxe’s long-term rating was downgraded to BB- from A by Fitch on February 13. The rating company cited concerns over the company’s profitability and operational cash flow because of the challenging environment. CARE, another rating company, also lowered the real estate developer’s rating, citing “increased financial risk profile of the company characterised by slowdown in the real estate sector.”

Further, lower-than-anticipated cash generation and limited funding options in the market exposed the company to liquidity and refinancing risks in the short term, CARE said in a statement.

“We are trying to get the cost of our debt down by 100-150 basis points. The cost of debt for us was 14 per cent in the last fiscal, but as the lending rates of all banks are coming down, our average cost of debt will come down by at least 100 basis points by the end of this month,” Malhotra said.

Another New Delhi-based real estate developer, Unitech, is trying to restructure a part of its Rs 500 crore debt that is due to mutual funds by April 19.

According to Malhotra, the company has received a very good respose for its newly launched affordable housing project, Omaxe Eternity, in Vrindavan. Spread over 52 acres, the project will be launched in two phases and will have 3,000 apartments. In the first phase, the company has launched 1,000 apartments. Malhotra did not divulge the number of bookings for the newly launched project, even as he said the enquiries from customers had been encouraging.