SP Group nears $3.2 billion refinancing deal with global credit funds 

A large portion of the loan is linked to SP Group's promoter entity, Sterling Investments Pvt Ltd, which had secured $2.6 billion in 2021

Shapoorji Pallonji Group is nearing a deal with a group of global alternative asset investors to refinance its outstanding debt of approximately $3.2 billion, sources directly aware of the transaction told Moneycontrol.

A large portion of the loan is linked to SP Group's promoter entity, Sterling Investments Pvt Ltd, which secured $2.6 billion in 2021 from alternative investment manager Ares Management and hedge fund Farallon Capital with a tenor of three and a half year.

Sterling Investments holds a little more than 9 percent in Tata Sons, the holding company for the Tata Group.

“The refinancing will primarily be carried out by global alternative asset investors Davidson Kempner and Cerberus Capital, with partial financing from Farallon Capital and ARES, both of which will roll over a portion of their maturing debt,” one of the sources cited above said.

Shapoorji Pallonji Group was in discussions with Power Finance Corporation (PFC) to refinance the upcoming maturity at a lower rate. “However, the loan was ultimately not sanctioned by PFC’s Investment Committee for unspecified reasons,” the source said.

With this refinancing, SP Group will successfully restructure the entire facility, which is expected to be repaid through the upcoming IPO of its real estate business, for which the process has already begun, the sources said.

An email sent to Shapoorji Group had not elicited a response till the time of publication.

The group has received consent from the holders of non-convertible debentures (NCDs) to remove certain restrictive covenants. This move is likely to help the group refinance loans it had availed against shares of Tata Sons.

The group has also received in-principle approval from stock exchanges for the proposed changes to the NCDs, according to a regulatory filing by SP Group.

Moneycontrol was the first to write on December 6 that SP Group had sought the consent of its NCD holders to remove certain restrictive covenants to facilitate its efforts to refinance loans availed against Tata Sons shares held by Sterling Investment Corp.

The request for the waiver came after SP Group entity Goswami Infratech made significant repayments on these NCDs, amounting to Rs 14,300 crore, through the IPO of group company Afcons Infrastructure and the sale of the group’s stake in Gopalpur Port to the Adani Group.

The SP Group’s request to bondholders also came in the backdrop of delays in its efforts to raise fresh loans to refinance 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, Värde Partners, Canyon Capital, Davidson Kempner, as well as Deutsche Bank, Edelweiss Special Opportunities Fund, and ARES.

A significant portion of these NCDs was later sold to domestic investors, including HNIs and family offices.