The Shapoorji Pallonji group is mulling over options including a one-time debt restructuring plan even as it readies to mount a fresh round of legal challenges concerning the fair valuation of its minority stake in Tata Sons.
The Supreme Court has left it open for the two warring groups to decide on the valuation metric for SP Group’s 18.4% stake in Tata Sons.
While the Supreme Court judgment on Friday ends Cyrus Mistry’s hopes of playing a larger role in the Tata group, lawyers close to the SP Group said the verdict frees the status quo on pledging of shares sought by Tatas.
The SP Group is close to reaching an amicable conclusion on a one-time restructuring with lenders, as it has enough assets including real estate assets but what it lacks is liquidity, said people aware of the development.
Discussions are at an advanced stage for finalising a Rs 11,000 crore restructuring plan, that would allow the SP Group to postpone principal repayments by more than two years and put off interest payments by two quarters.
“The One time restructuring( OTR ) is not contingent on of Tata Sons shares. It gives us time to push the liability by 2 years and monetise assets. A separation would have helped exit the OTR faster but the freedom to pledge our share holding in Tata Sons gives us the flexibility to extract value from the Tata Sons shares” the lawyer said.
The Supreme Court verdict will not impact the Covid restructuring scheme, bankers said. In light of the ongoing feud between the Tata and SP Group, the latter had pledged shares of subsidiaries like Forbes and Company, Afcons, SP Imperial and a few other entities to raise fresh working capital support from lenders.
Last year, the Tata Group had moved the Supreme Court to block SP Group’s plans to pledge a portion of its 18.4% stake in Tata Sons, which it has been holding for the past seven decades, to raise Rs 11,000 crore. SP Group has valued the stake at over Rs 1.78 lakh crore while Tata Sons court filings peg the valuation at Rs 1.5 lakh crore.
“We would have liked it if the Supreme Court had sorted the valuation issue but looks like that will drag on. Our internal calculations show that we have a moderate risk towards exposure to the group, so yes fresh fundraising support could be hard to come by without proper collateral,” another lender said.
The SP Group has told lenders that it would raise nearly Rs 10,000 crore through asset sale and use a bulk of these proceeds to repay loans.
The assets that could be divested include Eureka Forbes, Sterling and Wilson Solar and Afcons Infrastructure. SP Group reportedly owes nearly Rs 23,500 crore in debt to local lenders.
The promoters of the SP Group have taken steps to address the liquidity issues of the group through stake sales in addition to pledging of Tata Sons stake. The group is selling solar energy assets to Adani Green Energy for about Rs 500 crore.