SP Group in talks to raise Rs 4,000 crore from SSG Capital, others

Shapoorji Pallonji (SP) Group has commenced talks with foreign investors to raise up to Rs 4,000 crore as debt to be paid to Indian lenders. This is seen as a last-ditch effort by the Indian conglomerate to circumvent the non-performing asset (NPA) label by March-end.

The group has already placed its three assets on the block. The move by SP & Company (SPCPL) — the flagship company of SP Group — comes at a time when banks are discussing its one-time restructuring (OTR) application. A banker said SP Group is in talks with SSG Capital and other institutions to raise funds till its OTR gets clearance. 

SP Group’s earlier attempts to raise funds from Toronto-based Brookfield Asset Management Inc. were nixed by Tata Group. Tata Group had said SP Group cannot give its holding company, Tata Sons, shares as collateral without its permission and had moved Supreme Court.

SP Group owns 18.5 per cent stake in Tata Sons, which is estimated by the group as being worth Rs 1.75 trillion. It is unable to unlock value due to pending litigation.

When contacted, an SP Group executive said it is not in talks with any lender to raise funds.

“Under OTR, all accounts, even if they are NPAs, will be upgraded automatically to a standard account on the date of OTR approval,” said a spokesperson for SP Group. 

According to the terms stipulated by SBI Capital Markets, on behalf of SP Group’s lead bank State Bank of India, the group plans to raise funds worth Rs 10,332 crore by offloading its assets. The proceeds from selling its stake in Eureka Forbes, Sterling and Wilson Solar, and Afcons Infrastructure will be used to repay loans worth Rs 9,348 crore. SPCPL has sought restructuring for Rs 22,183 crore of its debt.

But these divestments are dependent on the valuation realised on closure of respective transactions.  “Due to the Covid-19 pandemic, valuations have taken a knock. Stake sale will happen once the economy picks up,” said a banker.

In the OTR application, SP Group has not sought any concession in the rate of interest. It has said banks will not have to take any haircut on its principal repayment.

The company, however, has sought an interest moratorium up to September this year. It said its unpaid interest for the moratorium period (till August last year) and interest till September on all fund-based facilities be converted to funded interest term loan. It has also proposed to convert commercial paper and non-convertible debentures, and asked banks to defer repayment of principal instalments for two years. A promoter debt of Rs 2,724 crore at the end of 2019-20 is also proposed to be converted into perpetual deb