HDFC sells Rs 869 Crore Unitech loan to JM Financial’s asset rebuilding unit



With Unitech Ltd. in default of repayment of the loan, the housing finance company HDFC Ltd. said he sold the real estate company’s outstanding loan for Rs 869 crore to JM Financial Asset Reconstruction Company (JMFARC).

In a case filed with the ESB, HDFC said Unitech has not been able to regularly repay its loan due to the slow sale of its apartments.

Stating that its current exposure to Unitech Group involves some projects at various sites, HDFC said “it has ceded the outstanding loans of these projects to JMFARC”.

“Against the total dues of Rs 869 crore towards these projects, ARC paid HDFC Rs 155 crore in advance and issued security receipts (SR) to HDFC in the amount of Rs 705 crore which will be refundable during the construction period ”says the file.

HDFC further stated that these accounts were standard assets at the end of September and did not become NPA (non-performing assets) until the end of October 2016.

In view of the irregular payment history, HDFC said that in recent quarters, as a precaution, provisions of Rs 240 crore have been made in respect of these accounts.

“No further funding is required as a result of the sale of the loans to the CRA,” HDFC said.

He further stated that after taking into account the provision of Rs 240 crore already made (34% of SR), the net book value of SR will be Rs 465 crore.

The housing finance company said the Unitech group has faced slow sales of apartments in projects in the recent past, affecting the cash flow of the real estate company and negatively affecting the progress of construction work. .

This resulted in “erratic loan servicing,” HDFC said.

Declaring that all of Unitech’s projects are located in prime locations and financially viable but require additional funding,

HDFC said, “JMFARC will organize funds to support and launch these projects. Project progress and the resulting cash flow will then be closely monitored.”

As these projects are financially viable, HDFC said future cash flow will likely be sufficient to cover loan repayment along with interest.

Unitech, based in Gurgaon, had a consolidated net debt of Rs 5,265 crore at the end of the first quarter of this fiscal year.



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