The RBI mandated overseeing committee has approved the Scheme for Sustainable Structuring of Stressed Assets (S4A) for Hindustan Construction Company Ltd. The ICICI-led Joint Lenders’ Forum had proposed the scheme for the infrastructure major, the company said in a statement on Sunday.
HCC said it became the first company to get approval from the committee under the RBI’s S4A scheme. Its total funded debt of about Rs.5,107 crore has been considered under the scheme, which will be divided into two parts. The first part amounts to Rs. 2,681 crore (52.50 per cent of the total debt).The second part (unsustainable debt) totals Rs. 2,426 crore.
The share price will be determined as per SEBI guidelines and, accordingly, debt will go down to the extent of the conversion amount. The balance of the unsustainable debt will be converted into Optionally Convertible Debentures for 10 years, with a coupon rate of 0.01 per cent.
“The S4A scheme will help the company bridge the gap of ‘Cashflow Timing Mismatch’ between claims realisation (including interest) and debt servicing. The move comes at an opportune time as HCC is already on a recovery path with order book growth of over 30% in last one year, says HCC Group CFO Praveen Sood.