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RBI Panel Approves Stressed Assets Structuring Programme For HCC

HCC becomes the first company to get debt recast approval under S4A scheme.

At the construction site of a railway bridge in India (Photographer: Prashanth Vishwanathan/Bloomberg) 
At the construction site of a railway bridge in India (Photographer: Prashanth Vishwanathan/Bloomberg) 

The Reserve Bank of India-mandated Overseeing Committee has approved the Scheme for Sustainable Structuring of Stressed Assets for Hindustan Construction Company Ltd. (HCC), the company said in a stock exchange filing on Sunday. The ICICI Bank-led Joint Lenders’ Forum had proposed the scheme for the company.

With this, HCC becomes the first company to secure an approval by the committee under the RBI’s S4A scheme.

The company’s total funded debt is estimated at Rs 5,107 crore and has been considered under the scheme in two parts:

  • Part A includes sustainable debt of Rs 2,681 crore (52.5 of its total debt)
  • Part B includes unsustainable debt of Rs 2,426 crore

Lenders will subscribe to 24.44 percent of fresh equity which will bring promoter holding down to 27.4 percent from 36.1 percent earlier, The remaining debt in part B will be converted into optional convertible debentures (OCD) to be issued to lenders.

The S4A scheme will help the company bridge the gap of ‘cash flow timing mismatch’ between claims realisation (including its interest) and debt servicing. The move comes at an opportune time as HCC is already on recovery path with order book growth of over 30 percent in last one year. 
Praveen Sood, CFO, HCC