The share price of Hindustan Construction Company (HCC) advanced by 6.8 per cent on Monday morning as its lenders initiated a carve-out of Rs 2,100 crore of debt to a third-party-controlled special purpose vehicle (SPV) along with certain arbitration awards and claims.
The move will significantly deleverage the company and address its asset-liability mismatch, HCC said. The debt along with receivables will move to an SPV controlled by a new investor.
The tenure of the debt at the SPV will be up to 10 years and repayments from the proceeds of the awards will yield an internal rate of return higher than current yields offered by HCC.
The debt or asset carve-out, which will be in the nature of a slump sale, is subject to lenders' final approvals. Lenders aim to seek their internal approvals and target to close the transaction prior to March 31.
The company will also seek the requisite corporate approvals for the transaction. On March 26 last year, the HCC board of directors had approved the monetisation of certain awards and claims through an SPV controlled by investors led by BlackRock.
The shareholders' approval was later taken to transfer awards and claims amounting to Rs 2,082 crore in exchange for a cash consideration of Rs 1,750 crore.
At 11 am on Monday, the HCC scrip was trading 6.87 per cent up at Rs 11.04.
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