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Bankers to go ahead with Shapoorji Pallonji recast plan
Considering that the SC has ruled that it cannot adjudicate on the fair valuation of the two company’s shares, the issue of a potential exit of the Mistry family from Tata Sons remains in limbo.
bThe Supreme Court’s verdict in favour of Tata Sons Ltd in the Tata-Mistry case may not affect the one-time restructuring plan of the Shapoorji Pallonji (SP) Group, but may have a bearing on its implementation.
Considering that the SC has ruled that it cannot adjudicate on the fair valuation of the two company’s shares, the issue of a potential exit of the Mistry family from Tata Sons remains in limbo. Cyrus Mistry, former chairman of the Tata group, had proposed a plan of separation that involved a swap of the 18.47% held by his family in Tata Sons for shares of Tata Consultancy Services Ltd.
Bankers said while the restructuring will go on as planned, the success of the plan depends on the valuation of shares finalized by the two parties, besides SP Group’s ability to raise funds by pledging its substantial stake in Tata Sons.
“Both parties have to come to a common valuation. The restructuring plan will be implemented as scheduled. But how soon SP Group will be able to repay the debt will depend on when both parties sit together to examine it legally. That said SP Group also has a plan for monetizing the assets,” said a senior banker, seeking anonymity.
SP Group’s earlier attempts to raise funds from Toronto-based Brookfield Asset Management Inc. by pledging a portion of Tata Sons’ shares were nixed by the Tatas.
The Tata group had said SP Group cannot give its holding company, Tata Sons’ shares as collateral without its permission and moved Supreme Court. SP Group has been holding 18.37% stake in Tata Sons for the past 70 years, which is currently valued at over ₹1.78 lakh crore.
Shapoorji Pallonji and Co. Pvt. Ltd is also in talks with lenders for a debt recast plan, which includes deferring principal repayment by eight quarters and suspending interests till September. Mint had reported on March 10 that the terms of the recast proposal required the SP Group to pay the previously agreed upon interest rate, and fully repay the principal.
According to a report by Business Standard on March 16, SP Group is also in talks with foreign investors to raise ₹4,000 crore as debt to be paid to lenders. The Group has proposed to raise funds through a part or full monetization of its assets worth ₹10,332 crore, which includes Eureka Forbes Ltd, Sterling and Wilson Solar Ltd and Afcons Infrastructure Ltd. The proceeds from the proposed monetization of assets will be utilized to prepay loans worth ₹9,348 crore.
The Group has had little success in monetizing its assets so far. Last April, the Group sold 317 megawatts of solar projects to PE investor KKR and Co. for ₹1,554 crore.
