Sobha Developers defers plans to raise equity

Sobha Developers has deferred plans to raise equity through a rights issue, reports CNBC-TV18, quoting sources. The company had announced plans to raise about Rs 250–300 crore via rights issue in August 2008. However, market analysts say this could be a problem because the promoters cannot really subscribe to their share. CNBC-TV18's correspondent Priyanka Ghosh reports.

Sobha Developers had announced the raising of equity via the rights issue in August 2008. We understand from sources that this has been put on hold for the time being at least because of tough market conditions, as the company says.

Sobha Developers had plans to raise about Rs 250–300 crore via the rights issue. It has 87% promoter holding in the company and market analysts say that this could be a problem because the promoters cannot really subscribe to their share and that is really the reason why this has not worked out. However, Sobha Developers has, in fact plans, to raise about Rs 900 crore going forward. They will do this through land sales and also some kind of equity infusion at the SPV level, which they have confirmed. Their landbank is about 3,000 acres. So, there are no problems there.

There are 23 acres under construction and the rest not even under construction. There are no assets in the books of Sobha Developers that are income generating. So, it looks tough that it would find a buyer in this market. It has a debt of Rs 1,850 crore in its books.