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SP Group company seeks loan rejig under RBI’s Covid scheme

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(This story originally appeared in on Sep 30, 2020)

Mumbai: Shapoorji Pallonji and Company, the SP Group flagship, has formally written to banks for a restructuring of its loan obligations under the special Covid scheme announced by the Reserve Bank of India (RBI). This is the first large account of over Rs 1,500 crore to come up for restructuring and is likely to be referred to the K V Kamath-led committee, which will vet all restructuring proposals of over Rs 1,500 crore.

The company, which is the group’s infrastructure and real estate business, has seen its cash flows hit by the Covid-19 pandemic. Although the promoters are well-placed in terms of net worth, they are not able to leverage their assets because of the dispute with the Tata Group.

Speaking to TOI, a senior banker confirmed that the company has put in an application this week to restructure their loans. The company’s total debt obligations are close to Rs 11,000 crore. “There is no problem with the group. It is largely a cash flow problem because it is an infrastructure group. It will be a light restructuring.”

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The restructuring came up because the expected cash flow from the pledge of shares did not materialise. The group had struck a deal with Brookfield to raise funds by pledging the stake in Tata Sons. However, the legal objections meant that the funds did not materialise. The restructuring will result in all financial creditors entering into a standstill. “It will be a light restructuring and if the group’s proposal to sell stake in Tata Sons materialises, they might not even require relief,” said a banker.

The SP Group is the single-largest stakeholder of Tata Sons — the holding company of the Tata Group — with an 18.4% stake.

Earlier, the company had struck a deal with private equity firm Brookfield to raise Rs 3,750 crore of debt by pledging its stake in Tata Sons. However, the deal did not go through because of Tatas taking legal objection.

Earlier this month, the Supreme Court directed the SP Group to maintain the status quo until October 28. Bankers expect the setback to be temporary as the SP Group has decided to exit the Tatas. “Today, it is with a heavy heart that the Mistry family believes that a separation of interests would best serve all stakeholder interests,” SP Group had said in a statement last week. It added that it was crucial that an early resolution is reached to arrive at a fair and equitable solution reflecting the value of the underlying tangible and intangible assets.





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These money and investing tips can help you with stock and bond strategies to whip inflation

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