HCC shares surge on debt resolution plan

The debt resolution plan, supported by 23 banks and financial institutions, helped boost the shares of Hindustan Construction Company HCC by 20 per cent in the afternoon. After two days of a fall, the HCC stock has gained. HCC shares opened at Rs 12.95 with a gain of 5.97 per cent. The share price of HCC hit a new intraday high of 14.66, rising 19.97 per cent on the BSE. The stock of HCC has gained 49.13 per cent in a year, but lost 12.8 per cent in 2022.

The market cap of HCC rose to Rs 2,218. 10 lakh crore. The firm's shares totaled 138.14 lakh and had a turnover of 19.48 crore on the BSE.

A large portion of HCC's debt is carved out by the resolution plan, along with commensurate assets from its balance sheet. This event will result in a long-awaited solution to the asset-liability mismatch faced by HCC on account of the delay in the realisation of its arbitration awards and claims. The plan comes with continued operations momentum and robust performance along with return of capital by its concessions arm, according to HCC.

The debt resolution plan has been implemented by HCC and lenders' liability is worth Rs 2,854 crore, along with beneficial economic interest in arbitration awards and claims of Rs 6,508 crore as consideration for a Special Purpose Vehicle SPV. The SPV will have an external investor controlling 51 per cent and HCC holding balance shares.

The debt of the SPV is expected to be fully serviced from its own receivables. Interest income can cover any accrued interest on SPV debt, as well as interest income that is owed by the underlying arbitration awards.

HCC will have the right to receive surplus cashflows as a separate transaction based on the repayment of SPV liabilities and realisation of awards and claims expected to be of significant value, according to the statement.

Hindustan Construction Company is engaged in the business of 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 the construction of roads, highways, expressways, bridges, elevated corridors, railways, metro rails, ports and marine structures.