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Unitech Eyes Issue of Shares

The realty company, fresh from a recent private placement, has just received shareholder approval for issue of shares

The recent weeks have surely sprung surprises as far as the stock markets are concerned. A look at the statistics of stocks for the past few weeks and one realizes how last year’s worst performers have come out winners this time, case in point: Unitech.

Blame it on the markets which reacted positively to a stable Congress-led UPA coalition for its second term that led to companies like Unitech seeing a steep rise in their share price. And now buoyed by it, the latter is all geared up raise further capital through a further share issue, numbered at a billion.

In a recent move, Unitech has sought approval from its shareholders to issue up to a billion shares to raise more funds and it got it. The current share market price of the company, which the country’s second-largest realty firm, is Rs 87 and if the company finally moves ahead with its above-mentioned plan, it could raise around Rs 8,500 crore.

It is not that the company has started chalking out its plans now. Taking the route of issuing fresh shares to select foreign and domestic investors, the company has already mobilized an amount of Rs 1,625 crore two months back this year.

In that, an amount to Rs 700 crore of funds thus raised through qualified institutional placement (QIP) was utilized by the company for repayment of a part of its debt which totals to around Rs 7,800 crore.

If that was not enough, the company has also unveiled its plans to raise Rs 1,150 crore through a preferential issue of convertible warrants to promoters at Rs 50 each where each of the warrant would be convertible into one equity share, reports Business Standard.

The company has already claimed to have raised nearly Rs 1,000 crore when it sold off two hotel properties and a commercial office space in NCR region.

The company has also got shareholder’ approval to issue 227.5 million convertible warrants on a preferential basis to promoters at Rs 50 for each. On the other hand, the group would have to cough up 25 per cent of the total amount in the next 15 days while once the conversion of the warrants are done, the group’s stake in the firm will go up by 5 per cent from the current 51 per cent.

As per the information available, the firm has booked over 4 million sq ft of residential space in the past two months and expects a huge jump by the end of this financial year. Company officials maintain that it could be well around 20 million sq ft of space.

If top company officials are believed, it is the real estate companies in which the investors are showing interest while the real estate market has become passé. However, the company feels that due to the bullish sentiments of markets, one should prepare well in advance and chalk out strategies well ahead to have a smooth future.

Running high on their better than expected results as far as sale of assets are concerned, the company expects a fulfillment of Rs 1,700 crore by this financial year against an expected Rs 1,600 crore.

As far as the listing of its Real Estate Investment Trust (REIT) is concerned as on the Singapore Stock Exchange, top company officials maintained that the market in that country was not so good so as to get the desired money through public issue of its commercial assets.