HCC is First Company Getting Debt Recast Under RBI’S S4A Scheme (Download PDF)

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Hindustan Construction Company (HCC) became the India’s first company to get Reserve Bank of India’s (RBI) approval for debt recast under Scheme for Sustainable Structuring of Stressed Assets (S4A). This scheme was passed by ICICI Bank- led joint lender forum and approved by RBI’s – mandated overseeing committee.

Hindustan Construction Company

Hindustan Construction Company

Hindustan Construction Company

Key Details of Debt Recast of HCC

  • Nearly, Rs. 2600 crore 52% of the sustainable debt can be serviced as per original terms and conditions including interest rate and lease.
  • 48% (Rs. 2400 crore) debt, 1000 crore rupees debt will be converted into equity for banks giving them 25% stake in the company’s post-scheme equity capital.
  • SEBI guidelines will dictate the share price and debt will go down to the level of the conversion amount.
  • Balance of Rs.1400 crore will be converted into Optionally Convertible Debentures for 10 years with a coupon rate of 0.01%.
  • These measures will now go through HCC’s shareholders’ approval.

About Scheme for Sustainable Structuring of Stressed Assets (S4A):

  • This scheme was launched by RBI to resolve the corporate debt problem and strengthen the lenders’ ability to deal with stressed assets.
  • RBI also constituted advisory body to review the resolution plans submitted by the Banks. This advisory body is called Overseeing Committee (OC).
  • Task of identifying the loans eligible for restructuring under S4A will be carried out by the professional agencies including famous experts.
  • Aggregate exposure of an enterprise like Rupee loans, foreign currency loans, external commercial borrowings etc. of all institutional lenders should be more than Rs. 500 crore to be eligible for the scheme.
  • Sustainable debt cannot be less than 50 % of current funded liabilities if an enterprise is to be eligible for S4A.
  • Unsustainable debt can be converted into equity and Optionally Convertible Debentures or Redeemable Optionally Convertible Preference Share with clearly signified out terms.

About Hindustan Construction Company

  • HCC is a public-private company Founded by Industrialist Seth Walchand Hirachand.
  • The group of HCC includes HCC Ltd and its subsidiaries such as:

    • HCC Real Estate Ltd.
    • HCC Infrastructure Co. Ltd.
    • Lavasa Corporation Ltd.
    • Steiner AG in Switzerland
    • Highbar Technologies Ltd.
  • Founded: 1926
  • Headquarters: Mumbai, India

- Published/Last Modified on: November 6, 2016

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