Orbit Corporation plans to reduce pledged shares by 15%

Orbit Corporation, Mumbai-based real estate developer, said its promoters plan to reduce their total pledged shareholding from the current 55% to a comfortable 35-40% in the next three months.

Up to 15% shares would be revoked against small land parcels or robust cash flows.

While it plans to reduce pledged shares, Orbit will also look at refinancing around Rs150 crore of a total debt repayment of Rs250 crore scheduled for this fiscal.

In July 2011, Orbit revoked around 12 million pledged shares, or 22% of the total promoter shareholding, reducing the percentage of pledged promoter shares from 77% to the present 55%. The total promoter shareholding in Orbit is 46.99%.

“To acquire some properties last year we used some shares in the company. Now that some of these projects have matured, we have mortgaged some of them and removed the pledge,” said Pujit Aggarwal, managing director and CEO, Orbit, told DNA.

“We would be looking at revoking around 10-15% over the next 2-3 months. So that the pledged shares are at a very comfortable level of around 35-40%,” he said.

Also, the company plans to refinance around Rs150 crore of the total debt repayment due this fiscal at a higher refinancing cost of 15.5% as against 14.5% at present, Ram Yadav, CFO, Orbit, told analysts on an earnings call.

The company’s total debt is around Rs797 crore.

Yadav also confirmed discussion with both JSW and Mahindra group for two different properties.

“We have held preliminary discussions with Mahindra and have also signed an MoU for the Ocean Parque project. The agreement would be finalised in 3-4 weeks,” said Yadav, estimating the total deal size in the range of Rs235-250 crore.

Orbit had acquired the Gulistan Bungalow property (later named Orbit Ocean Parque) at Napean Sea Road in 2008, which it plans to sell to the Mahindra group’s real estate arm, Mahindra Lifespace.  Mahindra Group vice-chairman and managing director Anand Mahindra is also a tenant at this property. Further, Yadav also confirmed discussions with Sajjan Jindal’s JSW group to co-develop the Maheshwari House property at Napean Sea road.

“No formal arrangement has been made,” said Yadav.  Orbit’s consolidated net dropped 52.81% at Rs9.54 crore for the quarter ended June 30 year on year.