SP Group exits one-time resolution plan; repays Rs 12,450 cr to lenders

SPCPL's one-time resolution of debt was unanimously implemented on March 31, 2021 by all the lenders of SPCPL after construction activities came to a grinding halt due to Covid

Shapoorji Pallonji and Company Private, the holding company of SP Group, has repaid Rs 12,450 crore to its lenders and exited the one-time resolution (OTR) plan earlier than its scheduled deadline. This will be the first OTR, which has been fully repaid within a year of implementation.

SPCPL’s one-time resolution of debt was unanimously implemented on March 31, 2021 by all the lenders of SPCPL after construction activities came to a grinding halt due to the Covid pandemic and lockdowns had hit the construction activities all over India. SPCPL's resolution plan had sought a two-year extension of timelines to repay lenders, and did not involve any haircut for any lender. The lenders' consortium was led by State Bank of India in its capacity as the facility agent.

The accelerated repayment of lenders was enabled by the Mistry family infusing over Rs 5,100 crore into the company in the last year. SPCPL also sold two of its key assets from two of its assets including its renewable energy arm, Sterling Wilson Renewable Energy to Reliance Industries and consumer durable arm, Eureka Forbes to raise Rs 3,750 crore, which was used to repay lenders.

“We are very happy to have repaid all our lenders ahead of plan. We expect this development to have a positive impact on the Group’s credit outlook. We thank all our stakeholders including our business partners and bankers for their trust in us. We are confident that we will emerge stronger as a Group," an SP Group spokesperson said.

SPCPL is one of India’s oldest engineering & construction companies and has an order book in excess of Rs 30,000 crore. The real estate company of the SP Group reported over Rs 4,000 crore of sales in the fiscal 2022 despite the COVID pandemic.

According to industry sources, the SP GRoup promoter entities, which own 18.5 percent stake in Tata Sons, the holding company of India’s largest business group, pledged Tata Sons' shares to raise funds from both Indian and foreign financial companies. These funds were used to repay the Indian lenders.

The pledging of Tata Sons Private shares was a major bone of contention between SP Group and the Tata group. SP Group wanted to raise funds by pledging shares but the Tata group objected to it and moved the Supreme Court in September 2020 to block the pledge citing its articles of association. Tata Sons also became a private limited company so that any potential share transfer becomes a cumbersome process -- without its approval.

In March last year, the Supreme Court had decided in favour of Tata Sons in the dispute related to Mistry's removal as chairman of Tata Sons by the board in October 2016 but did not stay the share pledge by SP Group, which was facing a financial crisis due to the Covid pandemic. The group had a total debt of Rs 25,000 crore when it had applied for the OTR.