Lodha Group Secures Rs 6.50 Bn Debt

01 Oct 2023

Macrotech Developers, known as the Lodha Group in Mumbai's real estate sector, has raised Rs 6.50 billion in debt facilities from Standard Chartered Bank and Deutsche Bank. This funding, with a three-year tenure, will be used to refinance their existing high-cost debt, according to sources familiar with the situation.

Standard Chartered Bank has provided Rs 2.45 billion at an annual interest rate of 9 per cent, while Deutsche Bank has extended Rs 4.05 billion at an interest rate of 9.5 per cent, with payments due on a quarterly basis. Notably, these funds have been granted in the form of non-convertible debentures (NCDs) with varying terms. Deutsche Bank's bonds are unsecured, whereas Standard Chartered's bonds are secured.

The NCDs worth Rs 2.45 billion issued to Standard Chartered Bank include a provision where the bank would impose an additional 50 basis points in the event of any credit rating downgrade for Lodha Group. (One basis point is equivalent to one-hundredth of a percentage point.)

For the NCDs amounting to Rs 4.05 billion subscribed by Deutsche Bank, the interest rate is set at a spread of 2.7 per cent over the 90-day treasury bills issued by the Reserve Bank of India (RBI). As per the bond's offer document, the spread on T-bills will see a reduction of 25 basis points starting from the December 2023 quarter.

This debt refinancing move is aimed at reducing the overall debt burden, even as Macrotech Developers has embarked on adding several new projects in the current fiscal year. In the June quarter, the company introduced five projects with a potential gross development value (GDV) of Rs 120 billion, spanning the western suburbs of Mumbai, Bengaluru, and Alibaug.

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