RBI's OC approves its first S4A scheme for HCC

The Overseeing Committee of the Reserve Bank of India (RBI) has given its approval for the Scheme for Sustainable Structuring of Stressed Assets (S4A) for Hindustan Construction Company (HCC). It has become the first company to get an approval by the RBI's Overseeing Committee.

HCC has a total funded debt of Rs 5,107 crore, which has been considered under the S4A scheme. The debt will be divided into two -- sustainable and unsustainable debt. The sustainable debt of Rs 2,681 or 52.50 per cent of the total debt and unsustainable debt of Rs 2,426 crore or 47.5 per cent of the total debt.

According to the company, the lenders will subscribe to 24.44 per cent fresh equity (Rs 1,008 crore, assuming a rate of Rs 40 per share) which will bring down the promoter holding from 36.07 per cent to 27.44 per cent. The balance portion will be converted into optionally Convertible Debentures for ten years with coupon at 0.01 per cent, 11.5 per cent YTM.

The S4A scheme will help the company bridge the gap of 'Cashflow Timing Mismatch' between claims realisation (including its interest) and debt servicing.

The share price of HCC increased by 6.82 per cent on bourses in early trades and is currently trading at Rs 36.15 on intraday basis.