HCC becomes first company to go for debt restructuring under S4A scheme

Hindustan Construction Company (HCC) on Friday said that its board has approved to get its debt restructured under the Reserve Bank of India’s (RBI) scheme for sustainable structuring of stressed assets (S4A). 

It said, “The board has approved issuance of nearly 25.20 crore equity shares of HCC – which represents 24.44% of the expanded share capital of the company, along with optionally convertible debentures (OCDs) not exceeding Rs 2000 crore on preferential basis to the lenders.”

HCC would become the first company to get its debt restructured under the S4A scheme. 

S4A scheme is one of RBI move to curb the problem 'loans' of large projects at a sufficiently early stage and protect interest of lenders. 

Apart from this, HCC board also approved Rs 2100 crore in bank guarantee (BG) limits for release of arbitral award amount as per Cabinet committee on Economic Affairs (CCEA) move on reviving construction sector. 

Prime Minister Narendra Modi on August 31, 2016 had announced various measures to revive the construction sector which has been undergoing stress. Under which it directed government agencies to pay 75% of the arbitral award amount against margin free bank guarantee. 

HCC has arbitration award of Rs 3427 crore as of September 30, 2016. About Rs 4173 crore of arbitration are also in process.

After the announcement, the shares of HCC surged to Rs 41.35 per share on BSE. However, at 2.19pm, the shares of HCC crashed by 0.49%, trading at Rs 40.80 per shares.