Shares of Hindustan Construction Company (HCC) zoomed 20 per cent in the afternoon session today after the firm announced the completion of its debt resolution plan, supported by 23 banks and financial institutions. HCC stock has gained after two days of consecutive fall. HCC shares opened with a gain of 5.97 per cent at Rs 12.95 today. HCC share price touched an intraday high of Rs 14.66, rising 19.97 per cent on BSE. HCC stock has gained 49.13 per cent in a year but lost 12.8 per cent in 2022.
Market cap of HCC rose to Rs 2,218.10 lakh crore. Total 138.14 lakh shares of the firm changed hands amounting to a turnover of Rs 19.48 crore on BSE.
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“The resolution plan has carved-out a significant portion of HCC’s debt along with commensurate assets from its balance sheet. This event results in a long-awaited solution to the asset-liability mismatch faced by HCC on account of the delayed realisation of its arbitration awards and claims. The plan comes on the back of sustained operations momentum and the robust performance alongside return of capital by its concessions arm,” HCC said.
Under the debt resolution plan, HCC has transferred lenders’ liability worth Rs 2,854 crore along with beneficial economic interest in arbitration awards and claims of Rs 6,508 crore as consideration to a Special Purpose Vehicle (SPV). The SPV will have an external investor controlling at least 51 per cent and HCC holding balance shares.
The SPV debt is significantly over-collateralised and is expected to be fully serviced from its own receivables. The underlying arbitration awards also carry interest (income), which comfortably cover any accrued interest on SPV debt.
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“Upon repayment of SPV liabilities, HCC will in fact have the right to receive surplus cashflows as a separate transaction, from realisation of awards and claims (expected to be of significant value),” the statement said.
Hindustan Construction Company is engaged in the business of providing engineering and construction services, real estate, infrastructure and urban development and management. It provides engineering and construction services for projects across sectors, such as transportation, power, water, and buildings and industrial projects. Its transportation projects include construction of roads, highways, expressways, bridges, elevated corridors, railways, metro rails, ports and marine structures.