Unitech promoters repay Rs 178-cr debt

The promoters of realty major Unitech have repaid the entire amount of Rs 178 crore to investors to prevent Morgan Stanley from selling shares that were held against debt raised by some group entities. HT reports.

The promoters of realty major Unitech have repaid the entire amount of Rs 178 crore to investors to prevent Morgan Stanley from selling shares that were held against debt raised by some group entities.

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The promoters had raised the loan from high net-worth individuals last year through the issue of non-convertible debentures and had pledged their shares in Unitech to raise the fund.

Morgan Stanley was the banker of the issue of debentures.

The investors, from whom the funds were raised, had issued a notice on January 28 to Unitech promoters to return the money else they would sell the pledged shares in the market three days later on January 31.

In loan-against-share transactions,the financers keep a security cover of two-to-three times depending on borrowers' credit rating and track record.

These loans were originally due for repayment in May.

Morgan Stanley had moved in to sell the shares when the Unitech entities could not provide more securities resulting in fear of breach of loan covenants.

Covenants are undertakings given by a borrower as part of a term loan deal. Their purpose is to help the lender ensure that the risk attached to the loan does not deteriorate prior to maturity.

Unitech promoters had moved the Delhi High Court on January 30 to get a stay on the share sale. The court had directed Unitech to pay 20% of the debt by January 31, another 30% by February 4 and the balance 50% by February 22. A Unitech spokesperson declined to comment.