HCC skyrockets ~20% on completion of debt resolution plan

27 Sept 2022 , 03:04 PM

Hindustan Construction Company’s counter surged nearly 20% during the early trade on Tuesday after the company completed its debt resolution plan.

According to a regulatory filing, HCC has completed its debt resolution strategy, which was fully backed by 23 banks. "The resolution plan has removed a major chunk of its debt, as well as comparable assets, from its balance sheet."

Under the debt resolution plan, HCC transferred Rs2,854 crore of lenders' liabilities, as well as a beneficial economic interest in arbitration verdicts and claims totaling Rs6,508 crore, to a Special Purpose Vehicle (SPV).

Following this development, HCC Limited’s counter was trading 19.67% higher at Rs14.60, against the previous close of Rs12.20 on NSE. So far, the counter hit an intraday high of Rs14.60.

The above-stated SPV will have an external investor owning at least 51% with HCC owning the balance. The SPV's debt is highly over-collateralized and will be repaid entirely from its own receivables, informed the company to exchanges.

The underlying arbitration awards also carry interest (revenue), which comfortably pays any SPV loan interest.

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