Unitech promoters to infuse Rs 1,000 cr

NEW DELHI: The promoters of Unitech plan to raise their stake through conversion of warrants worth Rs 1,000 crore over the next 18 months, as they look to shore up their shareholding in the real estate company that has slipped to 51%. Unitech���s board, which met on Monday, approved the issue of warrants to the promoters ���on preferential basis��� , the company informed NSE.

The board has also approved the company���s plan to raise additional long-term funds, the company said. The company will seek shareholders��� approval for these plans in an extraordinary general meeting , likely to be held on June 16.

The first tranche of Rs 275 crore will be pumped in next month, said a company executive, who asked not to be named. He did not specify the number of warrants that will be issued to the promoters. A warrant is a security that entitles the holder to buy stock of the company that issued it at a specified price.

The company plans to raise additional capital of Rs 2,500 crore by issuing fresh securities, the executive said. It has in place an enabling resolution to raise Rs 5,000 crore, of which only Rs 1,600 crore was raised through QIP.
Unitech had raised fresh equity through a qualified institutional placement (QIP) in mid-April , which saw promoters��� stake in the company falling from 64% to 51%. The QIP, done at price of Rs 38.50, has partly addressed the concerns about company���s ability to repay debt. The re-election of the UPA government with a clear mandate has triggered a surge in the company���s stock price, which closed 10% higher on Tuesday at Rs 70.95.

���The promoters had pledged their shares earlier to raise funds, which was, in turn, lent to Unitech. Following the QIP, Unitech might have paid back promoters , who may use it now to subscribe to warrants,��� said Shailesh Kanani, a real estate analyst with Angel Broking.

The Unitech executive said promoters will use proceeds from sale of their investments in other companies to fund their warrant subscription. Unitech promoters recently sold off their stake in Bhubaneswar-based Orissa Sponge to raise over Rs 100 crore. Another analyst with a domestic brokerage pointed out that the promoters��� move may be driven by the feeling that stock prices are likely to go up and they can raise their stake in the company at lower prices.