Fresh fundraising move creates buzz in Hindustan Construction counter

Hindustan Construction Company (HCC), which had lost nearly half its value over the last three months, has been trying to regain some of the lost ground. On Friday, the company received an additional booster as it shared a fresh fundraising programme.

HCC said its board, which is already scheduled to meet next week to consider the first quarter results, will also take up a proposal for raising of funds by way of issuance of equity shares through qualified institutional placement.

The company did not share the amount of the proposed fundraise.

But traders see some upside now from the infrastructure development company that has been laden with debt and incurring losses.

HCC has been trying to reduce debt and shore up resources.

In December 2019, it initiated a material conciliation process with state-run NHAI to settle certain awards and claims. The company was successful in closing five conciliations within its BOT arm, HCC Concessions. It received a total sum of Rs 1,849 crore and the return of Rs 100 crore of its bank guarantees.

HCC Concessions Ltd (HCON) also completed the sale of Farakka-Raiganj Highways to Cube Highways in September 2020, with an enterprise valuation of Rs 1,508 crore, comprising debt of Rs 905 crore and an equity valuation of Rs 603 crore.

In early 2021, it also concluded its conciliation with NHAI for all disputes concerning Baharampore-Farakka Highways and Farakka-Raiganj Highways. The SPVs entered into settlement agreements with NHAI for a comprehensive closure of all outstanding disputes and claims between the parties for a total amount of Rs 1,259 crore.

More recently, early this year, HCC Concessions executed binding terms to sell Baharampore-Farakka Highways to Cube Highways at an enterprise value of Rs 1,279 crore, which is expected to generate up to Rs 900 crore of liquidity for the group when the transaction closes in the coming quarter.

The company had also embarked on a comprehensive debt resolution plan with its lenders and last year its board approved the plan to reduce its debt of more than Rs 10,000 crore. 

Under this, HCC will transfer up to Rs 4,000 crore of liability as also awards of up to Rs 2,749 crore and claims of up to Rs 2,136 crore, to a subsidiary and thereafter sell majority stake in the unit to a buyer picked by its lenders.

The plan is expected to achieve final closure shortly. Once completed, HCC's asset-liability mismatch will stand addressed, besides achieving material deleveraging.