India: Lodha Group in race to raise funds to meet debt obligations

Photo: Bloomberg

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.

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.

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.

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”.

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.

This article was first published on livemint.com.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.