December deadline: Shapoorji Pallonji faces $1.2 bn debt repayment with Tata Sons stake as collateral

The total promoter-level debt of the SP Group, held by the Mistry family, is estimated at ₹25,000–30,000 crore — roughly half of the group’s consolidated debt of ₹55,000–60,000 crore

The Shapoorji Pallonji Group faces about $1.2 billion in debt repayments by December, for which it has pledged its entire stake in Tata Sons as collateral, people directly familiar with the matter said.

The group, which refinanced about $3.2 billion of existing borrowings, is scheduled to repay the upcoming tranche, covering both principal and interest, within two months, the people said, requesting anonymity. The promoter-level debt held by the Mistry family is estimated at Rs 25,000–30,000 crore, roughly half of the group’s total debt of Rs 55,000–60,000 crore.

The group may find it challenging to mobilise the required funds to meet its repayment obligations, adding a layer of complexity to the ongoing negotiations over its proposed exit from Tata Sons, where it holds a little more than 18 percent stake, the people said.

Pledge over Tata Sons Shares Hard to Invoke

Lenders may seek additional comfort in the form of further collateral or more clarity from the SP Group on its asset monetisation plans, including those linked to its Tata Sons shares, they added. The debt is fully backed by SP Group’s assets, including the Tata Sons shares.

However, it remains unclear how invoking this pledge would help lenders recover their dues, given that Tata Sons shares are unlisted and cannot be sold to external buyers without the Tata Group’s consent. So far, the Tata Group has not indicated that it is willing to offer a full or partial exit to the SP Group for its stake.

An email sent to the Shapoorji Pallonji Group seeking comments remained unanswered till the time of publication.

People familiar with the matter said the SP Group has consistently maintained that a public listing of Tata Sons would be the most transparent and value-accretive solution for all shareholders. A listing would allow the group to liquidate its stake in the open market with adequate price discovery. Such an exit would also be more tax efficient — attracting around 12 percent capital gains tax compared to nearly 36 percent that would apply if Tata Sons were to buy back the stake directly.

SP Group’s Debt Problems

A large portion of the loan is to Sterling Investments Pvt Ltd, the promoter entity of the SP Group that secured $2.6 billion in 2021 from Ares Management and Farallon Capital with a tenor of three and a half years. Sterling Investments holds a little over 9 percent in Tata Sons, the holding company of the Tata Group.

Moneycontrol had earlier reported that the SP Group was in advanced discussions with a clutch of global alternative asset investors to refinance $3.2 billion of outstanding debt. The refinancing, which took place earlier this year, was led by Davidson Kempner and Cerberus Capital, with partial participation from Farallon Capital and Ares Management — both of which rolled over portions of their maturing debt.

The group was also in talks with Power Finance Corporation (PFC) for refinancing at a lower rate. “However, the loan was ultimately not sanctioned by PFC’s Investment Committee for unspecified reasons,” one of the sources said.

Earlier, Moneycontrol had reported that Goswami Infratech, another SP Group entity, had made repayments of about Rs 14,300 crore using proceeds of the IPO of Afcons Infrastructure and the sale of its stake in Gopalpur Port to the Adani Group.