Lodha Group, one of India’s largest property developers, is in a race against time to raise close to $225 million (around ₹1,600 crore) by selling bonds to meet its debt repayment obligations due next year.
The group, which has renamed itself as Macrotech Developers Ltd, has been reaching out to overseas investors, including several existing ones, to raise funds, two people directly aware of the ongoing discussions said on condition of anonymity. As much as $325 million worth of bonds are maturing by March.
The Mumbai-based company, whose rating was downgraded recently by Fitch as well as Moody’s Investors Service because of its uncertain financial situation, is also in talks with a few existing bondholders in Singapore to explore opportunities for a potential roll-over, said one of the two people cited above.
The company may either use funds raised against its Lincoln Square project in London or through infusion of funds from promoters to repay the rest of the bond amount, said the two persons cited above.
According to a November report by Moody’s, Lodha has secured a loan of $155 million against the Lincoln Square project. However, the drawdowns under this facility are subject to completion of all units at the property, which is expected by the end of this month, it had said.
A new bond issue is likely to be finalized in the next one month, the people mentioned above said.
In an emailed response, a spokesperson for Lodha said that the company has put in place arrangements for repayment of the $325 million bond issued for its international business. “As we repay the existing bond, we will continue to explore new issuances in the bond market on the back of our stellar track record of timely servicing and repayment,” the spokesperson said.
Meanwhile, a few of its existing lenders and investors are said to be looking to trim their loan exposure to the company in the last few months. Mint reported on 29 May that Piramal Capital and Housing Finance Ltd has sold its ₹2,000 crore loan exposure to the Lodha Group to a unit of Goldman Sachs. The Ajay Piramal group-firm has had a long-standing relationship with Lodha.
The company’s existing dollar-denominated bond was sold to finance its ongoing London projects. It currently has two residential projects— Lincoln Square and Grosvenor Square in the city. However, last year, Lodha Group said it plans to sell these projects to raise around ₹4,200 crore to pare its mounting debt and also focus on its domestic businesses.
The company’s move to exit the London projects came at a time when its planned ₹5,000-crore initial public offering (IPO) ran into a roadblock last year.
At present, Lodha has a total debt of around ₹19,000 crore, of which nearly ₹17,000 crore comes from its India business. The rest has been incurred through its London projects. The company plans to reduce the debt by ₹4,000 crore by the end of March, said a company official, who did not want to be identified.
Moody’s downgraded Lodha’s corporate family rating to Caa1 from B3, with a negative outlook, over financial uncertainties and liquidity risks.
The international rating agency has said that though the real estate developer has made progress in its refinancing efforts, “its measures to date do not completely alleviate the significant refinancing risks”.
In response to Moody’s downgrade, the spokesperson for Lodha had said that the company has made substantial progress in relation to the refinancing/repayment of its $325 million bond. However, the rating agency has chosen to downgrade the rating due to recent negative view taken by international rating agencies on the Indian economy and various Indian corporates, the spokesperson added.
The company, which is building Trump Towers in Mumbai apart from other luxury projects, plans to complete ongoing projects instead of making new launches to ensure a strong cash flow.
In an interview, managing director Abhishek Lodha said the company expects more than half of its sales—or around ₹5,000 crore—to come from mid-income housing projects in 2018-19.
The developer expects its housing business in the ₹ 35 lakh- ₹ 1 crore bracket to grow significantly faster than other verticals over the next 2-3 years.