Hindustan Construction Company (HCC) announced a significant reduction in its exposure to debt (arising from Corporate Guarantee) issued in connection with loan facilities of Prolific Resolution (PRPL), an associate company.
As part of its plan with lenders, HCC had transferred an aggregate debt of
2.854 crore to PRPL along with
6.508 crore of Awards & Claims, while retaining a 49% equity stake in the entity. The Company had also provided a corporate guarantee for 100% of the debt owed by PRPL to its lenders. With accrued interest, the total amount of PRPL debt along with Awards & Claims is currently
3.935 crore and
6.325 crore, respectively.
Following formal approvals from PRPL Lenders, its Board and relevant stakeholders, HCC's guarantee obligation has been reduced from 100% of the outstanding amount to
571 crore, representing 20% of the principal amount transferred. The reduction is part of the Company's ongoing commitment to de-leverage its balance sheet, strengthen its investment grade rating and access capital markets for stronger future growth as it scales its operations.
This material event has paved the way for HCC to access larger credit facilities and raise equity capital, including the recently announced Rights Issue which is supported by HCC's Promoter Group. The revised guarantee framework has been executed today in coordination with lending institutions and is in compliance with applicable regulatory, legal, and governance requirements.