A new and historic move has begun to resolve the years-old stake dispute between the two biggest giants of the Indian corporate world—Tata Group and Shapoorji Pallonji Group (SP Group). According to the report, both the groups are seriously considering the option of ‘Share Swap’ to unlock value amid the ongoing differences over the valuation of SP Group’s 18.4 per cent stake in Tata Sons. This step could prove to be a major turning point towards a permanent resolution of one of India’s biggest corporate disputes. Let us also tell you what kind of news has come out…
Discussion regarding share
People associated with the talks said that Tata Trusts Chairman Noel Tata, SP Chairman Shapoor Mistry and Tata Sons Chairman N. First a round of talks took place between Chandrasekaran. In this, Tata supported a framework under which Tata Sons would not take loan for the deal. Executives of Tata Sons and Tata Trusts also participated in the subsequent conversation. These included Tata’s close aide and Tata Trusts consultant Farokh Subedar. According to the information, valuation has emerged as a major hurdle. Both the parties could not resolve the differences regarding the value of the stake of unlisted Tata Sons and the shares of listed Tata Group, which could form part of any swap agreement.
Differences on method of monetization
On Thursday, the total market capitalization of 16 listed companies of the group was Rs 25.28 lakh crore, of which the value of Tata Sons’ stake in these companies was about Rs 11.9 lakh crore. The Mistry family, which runs SP Group, considered the condition of not taking loans as commercially unviable. He described the listing of Tata Sons as the best way to unlock value, which can provide value without any additional burden. It is believed that Noel Tata is against the listing of Tata Sons.
Is Tata’s stance changing?
This conversation has also sparked debate in some sections of Tata Trusts. Some officials have said privately that Tata had said about a year ago that he would not be involved in matters related to SP Group’s shareholding because he was associated with the Mistry family. Tata’s wife Aalu is Shapoor Mistry’s sister. Executives are now raising questions whether Tata’s stand on this matter is changing? However, another executive close to Noel Tata said that as chairman of Tata Trusts, he can certainly have a say in the matter, as the trust holds 66 per cent stake in Tata Sons.
SP Group got 21500 crores
Last week, media reports had revealed that SP Group has received commitments of around Rs 21,500 crore for the first tranche of its refinancing plan, and the issue has been fully subscribed by domestic and foreign investors. The fundraising includes three-year rupee bonds worth Rs 15,200 crore, which have a yield of about 18.95 per cent, and dollar bonds worth about $650 million, which are expected to yield about 14.5 per cent. This deal is expected to be completed on July 20.
Sons’ listing will have to be done in 18 months
This refinancing is being done through SP Group company ‘Equigen Investment’ and is supported by the group’s 18.37 percent stake in Tata Sons. This money will be used to replace a part of the company’s expensive debt with long-term funding. Officials say that much of the confidence regarding refinancing of SP Group’s debt is due to the support of Tata Sons’ pledged shares. Within 18 months of the bond issue, the company must either announce the IPO of Tata Sons or agree on the terms of disposal of the stake between Tata Sons, SP Group and (if applicable) a third party buyer.
Leave a Reply