SP Group asks NCD holders to waive off restrictive covenants to aid loan refinancing against Tata Sons shares

In June 2023, Goswami raised Rs 14,300 crore through rupee-denominated zero-coupon non-convertible debentures (NCDs) from a group of investors

Shapoorji Pallonji Group (SP Group) has sought the consent of its non-convertible debenture (NCD) holders to remove certain restrictive covenants in order to ease the group’s efforts to refinance loans availed against Tata Sons shares held by SP group entity Sterling Investment Corp Private Ltd, according to a notice to the NCD holders seen by Moneycontrol.

“As the Debentures have now been significantly de-leveraged post 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 to NCD holders read.

The funds, according to SP Group’s corporate filings, were raised by the Mistry family through Sterling Investment, 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.

The request for waiver comes 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.

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.

Fundraising delays

The request for the waiver also comes as the SP Group has faced delays in raising funds to refinance the loans availed by Sterling Investment Corp, which holds over 9 percent stake in Tata Sons.

Moneycontrol reported on May 6 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, PFC Chairman informed analysts that its board had decided not to go ahead with the financing proposal to Shapoorji Pallonji Group.

The covenants that are sought to be waived off put certain restrictions on the terms on which SP Group can raise funds to refinance the loans taken against the shares held by Sterling in Tata Sons.

A spokesperson for SP Group could not be immediately reached for comment.