DLF close to raising Rs 3k crore

Promoters In Talks With Foreign, Domestic Lenders; May Sell 7%

BILLIONAIRE KP Singh and family, the promoters of India's largest real estate company DLF, are close to finalising a deal with some foreign and domestic institutional investors which might fetch them around Rs 3,000 crore, according to people familiar with the negotiations. Based on Thursday's closing price of Rs 245, this would mean promoters offloading a little over 7% stake.
    DLF CFO Ramesh Sanka denied that the promoters had any plan to sell stake. But people familiar with the matter said Deutsche Bank has been given the mandate and a deal may be announced shortly. ET had first reported the proposed DLF stake sale on Thursday.
    The promoters own 88.55% in the company, as per the latest shareholding pattern available on NSE. It is understood that the promoters will plough back the proceeds of the stake sale into DLF Assets (DAL), which in turn will use the funds to pay DLF for the properties purchased earlier. DAL, which is owned by KP Singh and has investments from the UK-based Symphony Capital and the US-based hedge fund DE Shaw, buys IT SEZs from DLF. At present, the receivables from DAL is about Rs 4,900 crore.
    Analysts have described the rising receivables from DAL as the biggest cause of concern for DLF. The realty giant has been looking at multiple options to extinguish these receivables from DAL by either merging DAL with itself or converting receivables into equity in DAL. Meanwhile, DE Shaw is also reportedly looking at exiting DAL, and the promoters may use the proceeds of the stake sale to buy the hedge fund's stake.
    DLF has reported a 93% decline in its profit for the fourth quarter, and has been forced by home buyers to reduce prices in its ongoing projects, which has impacted its bottomline.
    The company has deferred several projects and is now looking at raising Rs 5,500 crore through asset sale to support its ongoing projects, in a market where credit is tight and home and commercial space sales have dramatically slowed.

CO FACES MORE TAX DEMAND
DLF will have to pay an additional tax of Rs 400 crore for 2005-06, after the I-T department found that the co had showed lower income. PAGE 6 

B'LORE PROJECT IN TROUBLE
DLF's Bangalore
project has run into trouble after the city corporation said the co did not get necessary regulatory nod. PAGE 6 

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