Unitech's Debt Mitigation Strategy
In a proactive move to navigate the current financial crisis, Unitech, India's second-largest real estate developer, is implementing a multi-pronged approach to address its ₹8,200 crore debt.
Asset Sales: Unlocking Value
- Hotels: Unitech plans to divest three nearing-completion hotel projects by 2009, with advanced discussions underway for the sale of Courtyard by Marriot, a 199-room budget hotel in Gurgaon, expected to close before January.
- Commercial Real Estate: Select commercial spaces will also be sold to generate funds.
- Plots for Schools and Hospitals: Approximately 27 five-acre plots and 15 hospital-earmarked plots are slated for sale.
Raising Capital
- Private Equity Funds: Unitech aims to rope in private equity investors for its residential projects by March 2009.
- Debt Transfer: ₹1,200 crore of debt will be transferred to its telecom joint venture, alongside expecting ₹300 crore as debt repayment from the same venture.
Financial Projections
According to Unitech Chairman, Ramesh Chandra, the company anticipates raising around ₹1,500 crore from the sale of hotels and commercial space. Coupled with the debt transfer and repayment, Unitech expects to mobilize approximately ₹2,500 crore by January.
“By January, Unitech will raise ₹2,500 crore through these routes,” emphasized Chandra, highlighting the company's strategic financial maneuvering to alleviate its debt burden.