Tata vs Mistry: Tata Sons willing to buy out SP Group's stake to help clear latter's debt

Tata Sons has offered to buy out Shapoorji Pallonji (SP) Group's stake in the holding company to help the group raise money to pay its debt. Further, the Supreme Court(SC) has also barred the Mistry group from pledging or selling any Tata shares until October 28 which is when final arguments for the case will be heard.

According to an Economic Times report, a Tata Sons lawyer informed the SC of the offer to purchase the 18 percent stake owned by the cash-strapped Shapoorji Pallonji Group to raise money for paying maturing debt.

It seems like the move comes after the Tata Group indicated to the Supreme Court that it was open to buy out the stake held by the Mistry family, the promoters of the Shapoorji Pallonji Group.

“It’s unfortunate, but existing together is no longer possible and there has to be workable, court blessed separation. The modus of separation has to be evaluated going ahead and a fair and equitable distribution of both tangible and intangible assets is required,” an individual familiar with ongoing developments told Moneycontrol.

“The value of the Shapoorji Pallonji group shareholding in Tata Sons is pegged at around Rs 1,78,459 crore based on recent calculations considering the value of listed, unlisted entities and the brand,” according to a second individual who is close to the SP Group. Moneycontrol could not independently verify this figure

Previously, Tata Sons had asked the Supreme Court to invalidate the pledging of Tata Sons shares by the Shapoorji Pallonji Group in favour of Axis Trustee Services and IDBI Trusteeship Services.

On September 5, Tata Sons moved the Supreme Court challenging these pledges that were created in December 2019 and April this year, along with a move made by the Mistry family-owned SP Group to pledge shares in favour of Canadian PE firm Brookfield Asset Management.

The SP Group has raised Rs 5,000 crore by way of debentures against pledges in favour of Axis and IDBI, which was not previously reported.

Cyrus Investments has pledged almost 82 percent of its holding in Tata Sons in favour of Axis Trustees to secure debenture funding of Rs 825 crore, which was later modified to a total amount of Rs 3957.84 crore in April 2020, according to the Tata Sons plea in the Supreme Court.