Lodha Group to buy back dollar bonds, cut debt

Real estate developer Lodha Group's subsidiary Lodha Developers International has announced a buyback programme for its senior dollar denominated bonds that are due in the year 2020.

For the buyback transaction, Lodha Developers International has entered into an arrangement with J P Morgan Securities PLC to commence the buyback programme for repurchasing on its behalf, "up to $65 million (up to 20%) of the $325 million outstanding principal amount," said the notification with the Singapore Stock Exchange.

"With the purchase of the 2020 Bonds, Lodha Group will provide liquidity to the 2020 bondholders, proactively manage its capital structure and reduce gross debt and leverage," said a statement issued by the Mumbai based realtor.

It is expected that the arrangements will take effect from January 22. This buyback of the 2020 Bonds will be financed by the developer from its "currently available funds".

This bond was issued by the Lodha Developers International in two tranches. In the first tranche was in 2015-16 wherein the company had raised $200 million at 12% coupon rate. While the second tranche, was raised towards 2017-end, of $125 million at 8.9% coupon.

As reported by DNA Money on Tuesday, Lodha Developers had put its IPO on hold. It had filed its Draft Red Herring Prospectus (DRHP) with market regulator Securities & Exchange Board of India's (Sebi) in April 2018 and the same was approved in July. The company initially planned to launch an initial public offer (IPO) in August to raise about Rs 5,500 crore.

The prime reason for not launching the IPO is the choppy market conditions and liquidity crunch. A couple of months after Sebi approval, market sources had shared that the company had trimmed down the IPO size to around Rs 4,200 crore.

The company's approved DRHP is valid till July 2019. Hence, it has six months more to wait for market conditions to improve and the company is confident of launching the IPO in the months to come. In a statement to DNA Money, a Lodha Developers spokesperson said, "The proposed IPO is very much on the anvil. The company will decide on the timing of the issue based on the market conditions."

As of previous fiscal's end, developer's consolidated debt level stood at Rs 18,000 crore.

Despite slowdown in the housing segment, Lodha Developers's net profit and revenue during the last fiscal rose on the back of 16% increase in sales bookings from its domestic business at Rs 8,100 crore. The company has presence in Mumbai, Pune and London property markets and had achieved sales bookings of Rs 6,950 crore during 2016-17. It is exiting the London market through equity sale in London business.

As on September 30, 2018, Lodha Group had 41 ongoing projects in India and two in London. These projects account for a developable area of 33.35 million square feet, of which 31.38 million square feet of projects are located in the Mumbai Metropolitan Region (MMR). As of September 30, 2018, the company also had 19 planned projects with a developable area of 59.69 million square feet, of which 58.69 million square feet are located in the MMR.

PROVIDING LIQUIDITY

• This first tranche of the bond in 2015-16 had raised $200 million at 12% coupon rate
   
• This buyback will be financed by the developer from its "currently available funds"