HCC falls 15% on reports of subsidiary Lavasa Corp heading for bankruptcy

The stock hit 18-month low of Rs 24.60, down 15%, extending its Wednesday's 5% decline on the BSE

Hindustan Construction Company (HCC) hit 18-month low of Rs 24.60, down 15%, extending its Wednesday’s 5% decline on the BSE after the media report suggested that the company’s subsidiary Lavasa Corporation headed for bankruptcy.

Lavasa Corporation Ltd (LCL), a unit of HCC that's developing it, is considering approaching the National Company Law Tribunal (NCLT) owing to challenges faced in raising money for project completion, the DNA report suggested.

"The Lavasa management is planning to declare bankruptcy and is likely to approach the NCLT by the end of this month i.e, March 2018. The funds-starved company is finding it difficult to manage day-to-day operations and has started resorting to selling non-core equipment to raise money and meet immediate expenses,” the report suggested quoting sources.

The BSE said the exchange has sought clarification from Hindustan Construction Company Ltd on March 22, 2018 with reference to news appeared in DNA Money dated March 21, 2018 quoting ""HCC subsidiary Lavasa Corp headed for bankruptcy."

In this regard, the National Stock Exchange (NSE) have advised the Company to provide clarification/confirmation on the news item in detail including whether such negotiations were taking place and whether you/company are aware of any information that has not been announced to the Exchanges which could explain the aforesaid movement in the trading.

At 11:03 am; the stock was trading 11% lower at Rs 25.65, as compared to 0.23% rise in the S&P BSE Sensex. The trading volumes on the counter jumped more than five-fold with a combined 58.23 million shares changed hands on the NSE and BSE.

The company has refuted the claims and issued a clarification.

“The news report appeared in a section of media is misleading and without any basis. We wish to state that we have been working jointly with the consortium of lenders for a financial solution for Lavasa. Due to RBI’s recent notification on IBC, the process has been slowed down till further clarity on the finer nuances of the revised framework emerge. We are hopeful of a comprehensive solution for Lavasa’s debt recast once the revised framework is deliberated to the satisfaction of all involved. Lavasa’s top priority is to safeguard the interests of all stakeholders, including the home buyers, who have believed in and supported the project,” Lavasa Corporation Limited's spokesperson said.