Tata Trusts continues to oppose SP Group's plan to transfer Tata Sons pledged shares for loan refinancing: Report

Shapoorji Pallonji Group initially raised loans against a pledge of its Tata Sons shares.

Tata Trusts has reiterated its opposition to the Shapoorji Pallonji (SP) Group’s proposal to transfer its 18.4 percent stake in Tata Sons, the holding company of the Tata Group, as collateral for fresh loans, the Mint newspaper reported citing Tata Trusts CEO. Tata Trusts maintains that shares of Tata Sons are not freely transferable under the company’s Articles of Association, which restrict share transfers following its conversion to a private company in 2017, according to the Mint report.

The continued opposition to the transfer of pledged shares may pose a significant challenge to the SP Group’s efforts to refinance its loans. The SP Group is under pressure to repay Rs 22,000 crore in debt, which is reportedly due by March 2025. These loans were initially raised against a pledge of its Tata Sons shares. The SP group now aims to transfer the pledged shares to new investors to secure fresh loans and refinance the existing debt, but Tata Trusts has again cited its long-standing objections.

Shapoorji Pallonji Group's debt repayment and restructuring efforts

The SP Group has been working to address its high debt levels over the past few years through asset sales, restructuring efforts, and refinancing initiatives. The conglomerate, which operates across real estate, construction, and energy, saw its patriarch Pallonji Mistry pass away in 2022, shortly after the untimely death of Cyrus Mistry.

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In April 2022, the SP Group exited a one-time debt restructuring plan by repaying Rs 12,450 crore to lenders, facilitated by asset sales and promoter fund infusion. Among its major divestments, the group sold its majority stake in Eureka Forbes to Advent International and its holding in Sterling and Wilson Renewable Energy Ltd.

Most recently, the group raised Rs 8,400 crore through the initial public offering of Afcons Infrastructure in November 2024. Afcons, a key subsidiary of the SP Group, generated Rs 12,907 crore in revenue last fiscal year.

But efforts to secure further financing have faced roadblocks. Talks with Power Finance Corporation to borrow funds for debt refinancing collapsed earlier this year, adding to the SP Group’s funding challenges.

Continued resistance from Tata Trusts to transfer pledged shares

The Mint report said that the executive committee overseeing Tata Trusts’ operations remains unanimously opposed to the transfer of Tata Sons shares -- aligning with the Trusts’ long-standing view that any such transfer requires prior approval. On its part, the SP Group acknowledged Tata Trusts’ opposition, but said that it has successfully raised capital against its Tata Sons stake in the past three years, following a 2021 Supreme Court ruling that allowed such moves.

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