Unitech FMP exposure's Rs 1,500 cr

Fixed maturity plans (FMPs), which are short term in nature, have invested a mammoth Rs 1,500 crore in troubled real estate major Unitech. This is part of a Rs 2,500-crore debt which Unitech has to repay by March 2009. The company is now trying to refinance a part of the exposure to FMPs and convert it into a long-term debt. For this, Unitech is in talks with banks to refinance part of the exposure, said investment company sources who wished not to be named. The other part of the exposure is expected to be rescheduled. Unitech’s head, corporate strategy and planning, R Nagaraju clarified that Unitech’s exposure to mutual funds was 15% of the total debt, not Rs 1,500 crore. However, he did not confirm how the company plans to pay back the debt. “There is a strategy in place to repay the Rs 2,500-crore debts by March 2009,” he said. According to an Edelweiss sector report published in November 2008, Unitech’s total outstanding debt is Rs 10,000 crore, while its net debt is Rs 8,350 crore. It has been reported that Unitech has already restructured Rs 1,000 crore loans, mainly with PSU banks, and the company is also talking to banks to restructure an additional Rs 500 crore to cut debt. The Reserve Bank of India recently allowed banks to restructure loans given to real estate companies for commercial real estate, and not classify them as non-performing assets (NPA). Earlier, the moment a loan extended to the real estate sector is restructured; the lender has to classify it as a bad loan. At the same time, however, one-time restructuring of loans to any other sector such as steel, textile or cement would not result in the loans being classified as NPAs. This new window has been given to banks till June 30, 2009. Unitech has been talking to investors for sale of some of its assets to raise money for repaying the debt. A few hospital and school plots are on the block, alongside its office building at Saket in Delhi and a hotel property in Gurgaon, comprising 199 rooms.