The board of real estate major DLF on Friday approved the company’s proposal to raise resources through QIP (qualified institutional placement), and at the same time issue warrants or compulsorily convertible preference shares (CCPS) to promoters. Accordingly, the board approved allotting 379.7 million convertible debentures to the founders of the company and preferential issue of 138.1 million warrants. It also agreed to issue 17.3 crore shares via the impending QIP or private placement. The authorised share capital of the company was raised from Rs 500 crore to Rs 1,000 crore. The board also appointed group CFO Ashok Tyagi as a whole time director for five years along with Devinder Singh.
On Wednesday, the company said the promoters would invest `10,000 crore (post tax) as fresh equity infusion and use it primarily to reduce debt. The company also said it would raise Rs 3,000 crore through an institutional placement in order to adhere to the Sebi guidelines, which mandate promoters of public companies to hold a maximum of 75%. Analysts said warrants and CCPS were being issued to ensure the stake of the promoters does not get too diluted. Currently, the promoters own close to 75%. The minimum public float required for a company to stay listed is 25%.
In August, GIC had acquired a 33.34% stake in DLF’s rental arm DLF Cyber City Developers (DCCDL) for Rs 11,900 crore and the management had outlined that the funds would be used to pare debt. At the end of September, DLF’s debt stood at close to Rs 26,000 crore, according to Bloomberg. Analysts estimate that there is potential for the company’s borrowings to fall by about `13,000 crore following the capital infusion.
The last time DLF’s debt stood at in the range of `13,000 crore was in 2008, according to Bloomberg. Consolidated revenue in H1FY18 stood at `3,962 crore, compared with Rs 4,251 crore in H1FY17. The consolidated PAT was `131 crore, compared with Rs 461 crore. However, the DLF stock has risen 43% since August post the GIC deal.
After halting sales for seven months, DLF has re-opened bookings for two housing projects — Crest and Camillas in Gurgaon —
Tyagi had said the company took a hiatus from sales to adjust to the implementation of the RERA, but continued construction at the cost of cash burn and negative cash flows. According to the company’s earnings presentation, the operating cash deficit is estimated at Rs 750 crore per quarter.