India’s second largest developer has entered into discussions with ‘public sector banks’ to restructure a Rs 800-crore ($164 million; €122.7 million) loan as it tries to stave off its creditors.
According to a report in India’s Economic Times, Unitech must repay debts of Rs 2,500-crore by March. It hopes to meet its obligations through a combination of restructuring its loans and selling its assets and stakes in the business to private equity funds.
R Nagraju, Unitech’s head of strategy and planning said: ‘We are in discussions with public sector banks for rescheduling our loans.’
The news is expected to alert many private equity buyers who had been largely frozen out of the market when it enjoyed years of growth alongside the wider economy. But as market sentiment and with that, sales volumes fell in recent months, developers are now turning to private equity sources for equity.
The report said Unitech was in discussions with multiple private equity players to raise between $300 million and $500 million by issuing convertible debentures in the company and a further $200 million by selling housing projects. Unitech also develops commercial schemes in addition to hotels and theme parks.
To further aid developers, the Reserve Bank of India has recently allowed banks to restructure loans used for commercial real estate without the developer having to class them as non-performing assets. This came about following intense lobbying by developers who were struggling to service their debts.