In a move that gives Shapoorji Pallonji Group (SP) a break, Indian lenders and the KV Kamath committee have cleared its Unique Restructuring Proposal (OTR). All debt restructuring proposals above Rs 1,500 crore were referred to the expert committee at its meeting on Tuesday.
Shapoorji Pallonji and Company (SPCPL) – the 150-year-old holding company of the SP group – debt repayment obligations in 2020-21 stand at Rs 5,320 crore on a stand-alone level and 10,000 crore at Rs at consolidated level. The group’s total borrowing amounts to over Rs 25,000 crore, while the flagship company has a debt of Rs 23,500 crore on its books.
The SPCPL had solicited the OTR for its obligations under the regulations of the Reserve Bank of India (RBI) Covid Relief Framework. The company had requested relief under the provisions in September last year. It had not made any payments due to its lenders, including the investors of its commercial paper, after applying for the OTR. The OTR was invoked on October 26, 2020. The inter-creditor agreement was signed by all eligible lenders on November 24.
The group, which lost a key trade battle with Tata Group in the Supreme Court, will not be able to pledge its 18.4% stake in Tata Sons, lawyers observed.
“The Tata group may try to block the pledge of shares on the grounds that if the SP group defaults, the shares can be auctioned off to third parties. It will be against the statutes of Tata Sons, ”said attorney HP Ranina.
As part of the OTR plan, the group agreed to sell key assets, including its stake in Eureka Forbes, Sterling and Wilson Solar, Afcons Infrastructure and plots of land, to raise Rs 10,332 crore and repay its loans after. the moratorium. The proceeds of the proposed monetization of the assets will be used for the prepayment of loans valued at Rs 9,348 crore.
The SP group has asked its lenders for a two-year debt repayment moratorium, as the real estate sector and its core construction business suffers a slowdown in the wake of the Covid-19 pandemic.
Along with the monetization of assets, business-to-business deposits (DCI) granted to SP group companies by the flagship company are also expected to be made – mainly from SD Corporation (Rs 1,000 crore) and entities including Shapoorji Pallonji Real Estate of a worth Rs 1,299 crore in 2021-22 by monetizing their project assets. The proceeds of ICDs totaling Rs 836 crore are proposed to be used for the prepayment of outstanding debt; the balance for company operations.
The group, in negotiations for a debt overhaul plan, had asked lenders to defer its principal repayment for two years (or eight quarters), in line with recommendations from the Kamath panel appointed by the RBI to help businesses affected by pandemic, and taking into account unpaid interest capitalized or converted into a term loan at capitalized interest. She also requested that interest on all facilities up to September 30 be converted into a loan.