HCC to sell litigation claims for Rs 1,750 cr

Kolkata: Ajit Gulabchand-led Hindustan Construction Company Ltd (HCC) has inked a pact with a BlackRock-led consortium of investors to monetise a pool of arbitration awards and claims for a consideration of Rs 1,750 crore, the company said on Tuesday. The construction major said it would sell rights to an identified portfolio of awards and claims on projects tied up in litigation to the consortium.

Significantly, the Mumbai-headquartered firm’s financials had been hit severely, thanks to a number of projects getting stalled and payments getting held back at the government against claims by contractors. Therefore, the latest move is expected to give the company some relief. HCC will use part of the funds, so raised, in prepaying its debt worth Rs 1,250 crore. All these, notwithstanding the fact that the deal will result in a partial write-down of the company's net worth as on March 31. This, interestingly, is the first time any infrastructure company has taken such a move.

Following the transaction, HCC will write off Rs 2,000 crore of working capital assets, being a combination of adjudicated awards and lodged claims, from its balance sheet.

HCC will set up a special purpose vehicle to carry out the transaction.