Shapoorji Pallonji (SP) Group has received a consent from the holders of non-convertible debentures (NCD) to remove certain restrictive covenants. It is likely to help the group refinance loans it had availed against shares of Tata Sons.
The group has also received an in-principle approval from stock exchanges for the changes to be made to the NCDs, a regulatory filing made by the SP Group showed.
Moneycontrol had first reported on December 6 that the SP Group had sought the consent of its non-convertible debenture holders to remove certain restrictive covenants to ease the group’s efforts to refinance loans availed against Tata Sons shares held by SP Group entity Sterling Investment Corp Private Ltd.
The request for waiver came after SP Group entity Goswami Infratech made major repayments on these NCDs, worth Rs 14,300 crore, through the IPO of Afcons Infrastructure and the sale of the group’s stake in Gopalpur Port to Adani group.
The SP Group request to bondholders also came in the backdrop of a delay in its efforts to raise fresh loans to refinance the existing borrowings against shares of Tata Sons.
In June 2023, Goswami raised Rs 14,300 crore through rupee-denominated zero-coupon NCDs from a group of investors, including Cerberus Capital, Varde Partners, Canyon Capital, Davidson Kempner, as well as existing lenders Deutsche Bank, Edelweiss Special Opportunities Fund and Ares SSG. A significant part of these NCDs were later sold down to domestic investors, including HNIs and family offices.
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December notice to NCD holders
“As the debentures have now been significantly de-leveraged after the committed Ports Monetization and Afcons Monetisation Event and as on date has a much lower outstanding compared to the Sterling Indebtedness…, and given that the refinancing of the existing Sterling Indebtedness has been delayed, we hereby request the Debenture Trustee to delink some of these restrictive covenants in relation to the Sterling Indebtness contained in the Transaction Documents, as it has been constraining the SP Group to discuss with the lenders of the Sterling Indebtedness,” the notice sent to NCD holders in early December read.
The covenants that SP Group sought to remove included conditions which linked repayments to the NCD holders to any refinancing or restructuring of loans of Sterling Investment.
After receiving the consent of NCD holders, these covenants linking the two loans have been removed, which should ease the group’s liquidity management as well as its negotiations with lenders to refinance the Sterling Investment loan.
The loans against Tata Sons shares held by Sterling Investment were raised by the Mistry family through bonds, with a maturity of 3.5 years, sold in 2021, and were primarily subscribed by alternative investment manager Ares SSG and hedge fund Farallon Capital. Sterling Investment holds over 9 percent stake in Tata Sons.
Moneycontrol reported on May 6 last year that SP Group has begun talks with Power Finance Corporation (PFC) to secure $1.2 billion to refinance part of the Rs 20,000-crore debt availed against Tata Sons shares.
In an analyst call in November, the PFC chairman informed analysts that its board had decided not to go ahead with the financing proposal to Shapoorji Pallonji Group.
An email sent to SP Group did not elicit a response till the time of publication.
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